denotes premium content | Dec 5 2008 Trade & Forfaiting Review magazine archive
Volume 8 Issue 5
Not so long ago, Russia looked set to overtake Saudi Arabia as the world’s largest exporter of oil. It didn’t happen. Or, rather, it hasn’t happened yet. The mess that ensued following the Russian government’s break-up of Yukos has led to a slowdown in foreign investment in the sector as financiers step back to see how events play out. Putin’s interference in the former oil giant’s fortunes was also one of many factors that contributed to the global oil price hike in 2004.
Of course, this is good news for Saudi, which retains its position as global producer – for now – despite ongoing security concerns over its oil infrastructure. But the picture is far from rosy. Burgeoning demand for global energy supplies, especially from China and India, means the Arab nation will have to significantly increase its output capacity from the nine million barrels per day (bpd) it currently produces. Despite being home to a quarter of the world’s oil reserves, some analysts question whether Saudi has the capacity to do this. Nevertheless, recent reports suggest it has the will – particularly if oil prices stay in the $40-$50-per-barrel bracket.
In February, world oil prices climbed to $52 a barrel in New York trading – almost reaching the $55-a-barrel highs recorded last October. The hike was partly down to freezing temperatures experienced in parts of Europe and North America. But they were also boosted by bullish comments from Saudi oil minister Ali al-Naimi, who said he expected prices to remain in the $40-$50 range throughout 2005. This might be good news for oil producers but, in the long term, sustained high oil prices could negatively impact global growth. But as long as soaring demand from China and India continues, it’s unlikely OPEC members, for instance, will be in any hurry to see prices lowered.
Indeed, as TFR went to press, oil prices surged to above $56 a barrel. The increase came despite OPEC’s decision to raise its output quota by an extra 500,000 bpd at a meeting in Iran on 16 March. OPEC said it would consider further output rises over the next few months. But, all factors considered, it’s unlikely a similar increase would do much to ease prices – after all, OPEC member states are already producing above their new daily-output ceiling.
Michele Martensen, editor
Features
A trade-finance lifeline
Tracking the physical movement of goods from procurement to payment on global trade transactions can be a tricky business. Kurt Cavano, chairman and CEO of TradeCard, explains how automating the supply chain streamlines this process for all parties involved.
Middle East: A new dawn
As high oil prices continue to entice investors to resource-rich countries in the Middle East, Erika Morphy reports on the region’s deepening liquidity and the challenges and opportunities facing trade and project financiers.
Cover story: Striking it rich
With global demand for oil spiralling in the face of limited supply capacity, it is difficult to see how oil prices will come down any time soon. While this is good news for producers, commodity financiers face aggressive competition in a market that shows no sign of cooling. Erika Morphy reviews the sector.
Regulars
Country Risk Appetite – February 2005
Analysis from Standard Bank London
Emerging-market debt pricing
Omni Whittington Commentary, March 2005
Collateral counts
Reinhard Uhl, global head of trade finance at Deutsche Bank in Frankfurt, describes how traders are doing their bit to aid risk engagement by banks and investors.
Company profile: Les plus populaires
After a year marked by sweeping organisational change and an impressive selection of landmark deals in oil, metals and soft commodities, Natexis Banques Populaires is riding high. So what’s next? Kathleen Williams asks Valerie Boas, head of distribution for commodities at the bank.
Personal profile: Finnish finesse
Topi Vesteri is a respected figure in the export-credit world. Here the 49-year-old executive vice president of Finnvera talks to Michele Martensen about ECA business and the exceptional development of Finnvera.
Letter from Hong Kong: David Sullivan
Some pretty robust performances by Asian economies were undermined by rising oil prices during 2004. With an energy intensity double that of OECD countries, the positive effects of strong export growth and increased private consumption were neutralised.
Market view
The export-finance market in the Nordic countries is undergoing substantial changes, triggering market players to re-evaluate their involvement in the field. Jean-Francois Tapprest, head of export and project finance at Nordea in Helsinki, reviews developments.
