As reported by SACE focus, twelve months ago, crude oil price forecasts were steadily above 100 dollars a barrel (USD/b). The investments made in the previous three years, with an economic convenience level of around 70 USD/b, were set to generate substantial profits: oil had become a precious resource in every corner of the globe, well paid on any market and essential for growth economic. Today its price is half and its availability appears almost obvious. It is not the first time that the price of oil has collapsed so drastically and suddenly.
The particularity of this decline is the supply of crude oil, which remains abundant also thanks to the resilience of small American shale oil producers, who have reduced the number of active wells by a third without affecting production too much, and of Saudi Arabia, which has so far managed to convince the of OPEC not to tighten the taps to maintain their market shares. While waiting for the effects of the cuts in investments in new businesses to be revealed (-30% on a global scale), the convenience of crude oil has encouraged the accumulation of substantial inventories, which can be used by importing markets in the event of a reduction in supply, but which can also delay the recovery of prices.
In this scenario, the availability of crude oil has exacerbated rivalries between producers and is weighing on the balance sheets of less solid exporters from an economic-financial point of view (Nigeria, Russia, Venezuela), accelerating ongoing processes in the name of efficiency, diversification and consolidation. Therefore, if the price of oil has halved, the same cannot be said of its value, both for the importance it covers in the economy of producers, exporters and consumers and for the unexpected convenience compared to alternative sources (see below about renewable energies, automotive fuels, derivative products…).
Lo 2014 oil shock, due to its speed and size, is leaving deep marks on the actors involved and has revealed in many cases the difference between strategic projects and economic initiatives: effective complementarity of renewable sources, sustainability of particularly complex projects, more or less intensive exploitation of existing resources, demand real and financial bubbles. Here then is that, if a year ago the winning strategy to capture record margins was to increase production, today it is to produce efficiently. Managing and hedging risks, granting payment extensions and making financial flows as fluid as possible along the supply chain have become aspects capable of significantly affecting the price. And never as in this phase is it important to have a strategy commensurate with size and ambitions and to find suitable partners for the challenge.
