Energy Outlook Q1 2015

Will 2015 Deliver yet Another ‘New Normal’ Set of Post-Lehman All will be Well Factors?


  • January-01-2015
Will 2015 Deliver yet Another ‘New Normal’ Set of Post-Lehman All will be Well Factors?

Just when you thought it was safe to go back in the water as the world emerged from the near death experience of the global credit crisis with the settled comfortable new normal familiarity of printing money, oil at $100 a barrel and Iran marginalized by crippling sanctions, the currents changed in 2014 within a few unpredictable months.

In the short space of two OPEC meetings the oil exporters group is staring down the barrel of a $500 billion collapse in revenue in 2015 as crude prices dropped like a rock alongside Japanese recession and Chinese GDP growth figures hitting a 5-year low. And it felt like every time one opened a newspaper or turned on a TV we were drowning in images of John Kerry, U.S. Secretary of State, and his Iranian counterpart Mohammad Javad Zarif, in permanent man-crush grins that screamed peace and love new beginnings.  
In late November, the world’s six major powers and Iran agreed to extend the nuclear talks yet again -- the new goal is to reach a political agreement within four months and a final deal by June 30, 2015 that would curb Tehran’s controversial nuclear program in exchange for sanctions relief. After years of isolation, Iran is positioning itself for the potential lifting of international sanctions, a move that would revive the Islamic Republic’s ailing energy industry, pave the way for its return as a major oil exporter and provide much-needed stimulus to the domestic economy. 
A normalization of relations with Iran would surely bring a lot of benefits to the Gulf region, with an economy of 80 million people hungry for modernization, even if the extra energy exports that would inevitably come would add to further downward pressure on oil prices.
That said, the opposite outcome of the Iran nuclear talks could trigger a major support to energy markets. The 2015 energy crystal ball surely has many more difficult to predict rain clouds, there’s Ebola and Vladimir Putin banging on the door of Europe and Islamic State terrorism, but in a world of zero interest rates the U.S. consumers are regaining their mo-jo and with the cash printing presses ready to go into action in Europe and Asia we could be about to embark on another wave of loose monetary freebie inspired growth!