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Six years ago, Mexico began the process of reforming its oil and gas sector, opening it up to private investment and ending the monopoly of its state-owned oil company. The election of President Andres Manuel Lopez Obrador has changed all that. Mexico is heading back toward resource nationalism, but stands to lose out in the ultra-competitive global oil market.
Dr. Carole Nakhle
2019 begins with the U.S. a dominant producer of oil and gas, while OPEC has allied with countries like Russia to try to put a floor under prices. Green energy sources continue to rise in popularity, but still have only a small impact on global consumption. And while developed nations phase out coal, developing countries will likely remain dependent on the fuel for the foreseeable future. How will all of these factors affect the global energy market going forward?
Venezuela sits on the world’s largest oil reserves but it is not even one of the top 10 global oil producers – and output is falling sharply. Socialist, resource-nationalist policies implemented by former President Hugo Chavez – and continued by President Nicolas Maduro today – are behind the country’s poor performance. With an utter economic dependence on oil, the country has become destitute. Only a drastic change in policy can reverse Venezuela’s course.
Central & South America
In our greening epoch, the
challenge for the oil and gas industry is to continue delivering fuels that
world economies still need while minimizing the impact of its activities on the
environment and making consumption of its products more efficient. Advances in
technology are making these ambitious goals possible.
OPEC has regained influence on the back of its cooperation with Russia. Some analysts suggest this partnership could be made more formal, for example by admitting Russia into the group, while others say doing so would make the organization even more unwieldy. Now, as OPEC continues to try to achieve “fair” and stable prices, it faces a new challenge: legislation in the U.S. could allow American officials to sue the organization for price fixing.
the effects of reimposed U.S. sanctions are beginning to be felt in Iran, oil
markets’ reaction has been measured. Tehran’s oil minister hopes that increased
business with China will help his country protect its global market share.
The international energy community is usually divided on oil prices, since consumers like prices low and producers prefer them high. But one thing everyone agrees on is that the current environment of low oil prices is not encouraging investment, which could trigger an energy crisis down the road. This reasoning is logical, but overly simplistic.
The first supertanker
bearing U.S. crude oil to Asia after a 40-year export embargo was liftd left
the Gulf Coast of Louisiana in February 2018. The event was hailed as the start
of a new oil trading era, and possibly the start of a war for market share in
Asia between U.S. shale producers and conventional exporters from the Middle
East. In fact, of all oil exporters to Asia, the Middle Eastern producers
should be the least concerned.
China & Northeast Asia
2016, some oil-producing countries that were not part of OPEC joined with the
cartel to agree on production cuts to shore up oil prices. At the time, plenty
of observers were skeptical the group would hold together. But not only did it
manage to implement the reductions (and extend them twice), it has put a floor
under oil prices. Now that prices are rising, many again doubt the alliance
will survive. But the realities of the oil market continue to make cooperation
beneficial, especially for the two leading countries: Saudi Arabia and Russia.
Maghreb & the Middle East
the past 15 years, India has elevated many of its relationships with countries
in the Middle East to “strategic partnerships.” But how much substance is there
to that moniker? Energy is the driving force behind the phenomenon: Indian
demand for fossil fuels is rising sharply, while Middle Eastern countries want
to shore up their positions in a crucial market. Beyond that, there is little
that is “strategic” about these ties, and the interests of energy buyers and
sellers are not necessarily aligned.
South & Southeast Asia