A couple of new analyses of Saudi Arabia's posture caught my eye...
Sizing up the Saudis, part 1: Over at the Council on Foreign Relations, veteran analyst Amy Myers Jaffe looks at the longstanding tension between prices and market share and recent changes in the kingdom's calculus, noting, "A significant oil price drop now would be inconvenient to Saudi Arabia's ambitious economic reforms."
- Here's one portion that ties together some strands: "Analysts calculate that the kingdom needs an oil price of roughly $60 a barrel for the Aramco IPO to meet acceptable revenues from the share sale. Events inside Saudi Arabia, including the recent arrest of at least eleven senior princes, former and current ministers, and dozens of top businessmen, sent oil prices higher Monday, raising the possibility that OPEC could even set its sights on $70 a barrel."
Sizing up the Saudis, part 2: Robin Mills, CEO of the consultancy Qamar Energy, looks at the agenda and motivations of Crown Prince Mohammed bin Salman (MBS) and explains why "Saudi Arabia historically a force for oil market moderation, has become a price hawk."
- A little more from his Mills' Bloomberg View column: "MBS is a man in a hurry. The war in Yemen, his plan to build a huge city of the future in the desert, the development of a nuclear power program, and investments in Uber, Softbank and other tech companies all require cash."
Big oil (and gas) bets on itself: Reuters has a new analysis of how the world's most powerful oil companies are positioning themselves for the future that says the behemoths don't buy the argument that their businesses face any imminent threat, despite some forecasts that demand could peak within a generation.
- "A Reuters analysis of clean energy investments and forecasts by oil majors, along with exclusive interviews with top oil executives, reveal mostly token investments in alternative energy. Today, renewable power projects get about 3 percent of $100 billion in combined annual spending by the five biggest oil firms, according to energy consultancy Wood Mackenzie," the story states.
One possible future: Bloomberg dives into one of the alternative scenarios laid out in the big OPEC annual outlook we wrote about yesterday. Their main forecast, as we noted, shows oil demand climbing through at least 2040, but Bloomberg notes...
- "A larger-than-expected boom in electric vehicle sales could cause global oil demand to peak and flatten out in the late 2030s, OPEC said."
- While Bloomberg notes that the report calls it "highly unlikely" that EV deployment will increase fast enough for this to happen, the story that the inclusion of this alternative forecast on EVs and peak demand shows that the cartel is starting to take the topic more seriously.