Shipping

Shipping is cutting CO2 emissions

For anybody who is concerned that further growth in international trade and shipping will result in more
pollution and more global warming, there is now evidence that this risk is being tackled.At least three
factors have substantially cut the fuel consumption of containerships: slow-steaming, the trend towards
larger, more fuel-efficient ships and restrictions placed by government on ships coming into the ports.
The result? As average ship size on the Asia-North Europe route increased by 40% over the five-year
period to 2013, CO2 emissions per round-voyage slot dropped by 35% (see chart below). Furthermore, as
average containership sizes increased by a further 23% between 2013 and 2015, it follows that emissions
per unit of capacity must have continued to fall (more recent data is not available).
Global container trade grows by 4-5% a year, so fuel efficiency gains of 6-8% a year mean that fewer
tonnes of CO2 are pumped by containerships into the atmosphere than before. For example, in 2014,
Maersk Line carried 7% more containers than the year before and reduced fuel consumption by container
shipped by 8% resulting in a net fall in the amount of fuel consumed and in associated CO2 emissions.
Of course, there is another reason why container shipping lines are reducing pollution from ships: by
reducing fuel consumption, they also reduce their operating costs. Since 2007, Maersk Line has achieved
a 25% reduction in CO2 per container.
If the carrier had not improved its energy efficiency and CO2 performance, the fuel cost in 2012 would
have been US$1.6 billion higher. Similarly, China Shipping Container Lines spent less money on bunkers
in 2013 than in 2012, despite shipping 2% more containers.For exporters and importers, lower ship
consumption has translated into lower freight rates and a lower carbon footprint (from their companys
international trade), but also longer transit times. In port, where pollution from all sorts of ship emissions
is a particular problem, substantial progress has also been made.
The port of Los Angeles reported that, during the 5-year period to 2010, the amount of diesel particulate
matters emitted by ocean going ships in the port fell by 68% and the quantity of CO2 emitted by ocean
going ships dropped by 22%. Governments, the International Maritime Organisation, ports and shipping
lines are currently focussing more on sulphur emissions. Tighter limits on sulphur emissions from ships
were implemented this year in parts of Europe and North America.
Several carriers have also switched to low sulphur fuel when calling at the heavily polluted port of Hong
Kong, following the introduction of rebates on port dues for greener carriers. The authorities in Hong
Kong are said to considering a ban on the use of high sulphur bunkers by containerships calling at the
port. The difficulty with government rules on the use of low-sulphur fuel is that they could cost shipping
lines and shippers more money due to the price differential between cleaner bunker oil and high-sulphur
oil. Yet, overall, international shipping is playing its part to protect the environment and the measures
taken so far by both government and the private sector seem to have been very effective.
Source: Drewry Supply Chain Advisors

Maritime cluster likely at GIFT City

The proposed maritime cluster in Gujarat is most likely to come up at Gujarat International Finance TecCity (GIFT) city. At a recently held meeting of the high level committee formed for the purpose, the
project was given a go ahead in principle. The seven member committee headed by chief secretary DJ

Pandian has now asked Gujarat Ports Infrastructure and Development Company Limited (GPIDCL) to
invite bids from consultants to carry out a feasibility study.
Sources said the committee had met on April 7 where it decided that the feasibility study should focus
more on conceptualizing the project with a global and national outlook. Sources disclosed that Gujarat
Maritime Board (GMB) had recently signed a memorandum of understanding (MoU) with Institute of
Ship Brokers in Dubai, Norwegian Maritime Cluster and Port of Amsterdam for developing the cluster in
the state.
GIFT city can be the ideal venue for the cluster as the whole idea is to provide all the urban amenities to
the stake holders. We can look at Switzerlands cluster as an example which happens to be a landlocked
country, sources said. Gujarats maritime cluster would be the first one in India. The state is eying
development of soft maritime infrastructure like ship finance, information technology (IT) support
maritime legal services, ship chartering support to complement the hard infrastructure that it has put in
place.
Officials said that the cluster approach concerns interconnected companies, specialized suppliers, service
providers and firms in related industries. They say that maritime services can be defined to include an
interconnected supply chain that covers distinct activities like shipping that includes ship owners, charters
and cargo interests, intermediate services like marine insurers, bankers and technical consultants,
maritime governance and regulation, support services and industry associations. Officials said that Indian
shipping industry now consists of several players including government ports, private ports, ship owners,
charters, brokers, forwarders, agents, surveyors, manning agents, ship managers, ship operators, maritime
lawyers, shipping consultants and several service providers.
Source: TNN

Oman Shipping fleet to swell to 60 by 2017

Omans national shipping fleet is projected to top 60 vessels by 2016-2017 as state-owned Oman
Shipping Company ( OSC ) continues to shore up its capability to meet the maritime transportation needs
of the nations burgeoning energy and industrial sectors. According to Tariq al Junaidi, Acting Chief
Executive Officer, OSC s diverse shipping fleet now comprises a total of 42 vessels with an aggregate
capacity of around 7.8 million deadweight tonnes (DWT).
A further 10 MR tankers (medium range product carriers) are due to join the fleet over the next two years.
Together with additional chartered tonnage, the fleet is expected to swell to a world-class 60 vessels by
2016-17, the official said, ahead of the 2nd GCC Supply Chain & Logistics Conference, which opens
today at Al Bustan Palace A Ritz Carlton Hotel.
OSC is supporting the two-day event as Platinum Sponsor in line with its commitment to supporting the
Omani governments goal of positioning the Sultanate as a regional gateway and logistics hub. OSC
always focuses on supporting the Omani economy not only by leveraging the import and export of Omani
cargoes, but also by providing shipping solutions which will enhance connectivity between Omani ports,
as well as other ports in the region. Having well connected ports and linkage to hub ports in the region is
essential for Oman in order to be a logistics gateway, said Al Junaidi. OSC now boasts a well-diversified
national shipping fleet that includes gas carriers, tankers, bulk carriers and liners catering to a wide range
of industrial and economic activities in the country.
With the growth of the mining and mineral processing sector, the company is now keen to offer its
formidable resources and expertise to meet the shipping needs of this promising industry as well. OSC
would like to see itself supporting the growth of the mining industry of Oman, notably in handling the
exports of Omani minerals and bulk commodities, mainly from Salalah and Sohar, as well as Duqm in the
future, said Al Junaidi. Going forward, OSC says it intends to actively partner Omani industries and

companies in meeting their shipping needs and thereby enhance the value proposition of their businesses
and support economic growth in general.
In 2015, Oman Shipping Company plans to focus on a long-term strategy to serve Oman by leveraging
the import and export of Omani cargoes. With the potential growth of the existing industrial hubs, and the
establishment of new ones, the Company must position itself to be the first choice shipping solutions
provider, in particular, for Oman-based firms, said Al Junaidi.
Additionally, OSC is closely monitoring developments in the Duqm Special Economic Zone where the
company envisions a lot of potential in the tanker, bulk and container segments of the shipping business.
OSC sees a lot of opportunity not only to grow in Duqm, but also to play a major role in supporting
Duqms development and enhance its connectivity with local as well as regional hubs. Indeed, OSC s
support to Duqm is important and has the potential to extend across of the companys business operations,
including tankers, bulk, liner and heavy lift.
On the technical management side, Oman Ship Management Company (OSMC), a wholly owned
subsidiary of OSC , saw the size of its fleet under in-house technical management expand to 26 vessels by
the end of 2014, up from 23 during the previous year. Ships under technical management include LNGs,
VLCCs, Product and Chemical Tankers, VLOCs and Multi-Purpose vessels a testament to the growing
prowess of Omans national shipping company. Oman Shipping Company SAOC ( OSC ) is a closed joint
stock company owned by the Government of the Sultanate of Oman through the Ministry of Finance (80
per cent) and Oman Oil Company (20 per cent).
Source: Oman Daily Observer

China gets 40-year rights at Pakistani port

China has been granted operation rights for 40 years at a port in Gwadar, a strategic deep-water seaport in
Pakistan, Hong Kong-based Pheonix TV reported. Infrastructure construction is nearly complete and the
port could be put into full use by the end of the year, Dostain Khan Jamaldini, chairman of the Gwadar
Port Authority, was quoted as saying. It could serve as a vital economic hub linking China and Pakistan,
he said. Gwadar, on the shores of the Arabian Sea in Pakistans western province of Balochistan, occupies
a strategic location between South and Central Asia and the Middle East, being situated at the mouth of
the Persian Gulf, just outside the Strait of Hormuz, gateway for about 20 per cent of the worlds oil.
It is also the end of the China-Pakistan Economic Corridor, which runs about 3,000 kilometres from
Gwadar to the northwestern Chinese city of Kashgar, an important part of the ancient Silk Road linking
China with Eurasia and Africa. Oil from the Middle East could be offloaded at Gwadar and transported to
China through the corridor, cutting the current 12,000 km journey to 2,395 km.
The TV station quoted Riaz Mohammad Khan, advisory board member of the Centre for International
Strategic Studies as saying: It (the port) will turn the tables it will really benefit Pakistan and China.
The economic corridor is an under-construction development connecting Gwadar to Chinas Xinjiang via
roads, railways and pipelines to transport oil and gas. It will act as a bridge for the new Maritime Silk
Route that envisages linking 3 billion people in Asia, Africa and Europe, part of a trans-Eurasian project
proposed by President Xi Jinping in 2013. Oil from the region to China will be facilitated, said
Pakistani President Asif Ali Zardari in 2013 when China was given the contract to operate the port.
Gwadar would become a hub of trade and commerce in the region, bringing together the countries of
Central Asia and lending new impetus to Pakistan-China relations, he said.
China is expected to invest $1.62 billion in the Gwadar project, including construction of an eastern
expressway linking the harbor and coastline, an international airport, breakwater and nine other projects
expected to be complete in three to five years. Gwadar will soon start building a container terminal
measuring 1,200 metres and a 300-metre-long cargo terminal that can harbor four berths. When fully

operational, Gwadar will promote the economic development of Pakistan and become a gateway for
Central Asian countries, including Afghanistan, Uzbekistan, linking Sri Lanka, Iran and Xinjiang to
undertake marine transport.
Source: Jakarta Post

Wet
Low Oil Prices Cost Exporters More Than Aid Importers, IMF Says
Tumbling crude prices will cost oil producing countries fiscal losses worth about 4 percent of their
economies this year, the International Monetary Fund said, listing Venezuela and Iraq among those most
severely hit. Oil importers in emerging and developing countries stand to gain average fiscal savings of 1
percent of gross domestic product, the IMF said in its Fiscal Monitor report. Focused on the shape of
governments finances, the report also pointed to the triple threat of low growth, low inflation and high
debt in advanced economies. In the U.S., the IMF urged a medium-term deficit reduction plan to deal
with the anticipated high cost of aging baby boomers, long-overdue tax simplification and
infrastructure investments.
High public and private debt levels continue to pose headwinds to growth and debt sustainability in
some advanced economies, the IMF said in the report. Meanwhile, lower oil and commodity revenues
have created challenges for exporting countries. The hit for exporters ranges from close to zero to more
than 25 percent of GDP, depending on how much their budgets depend on oil revenue. Brent crude, the
benchmark for most of the worlds oil, fell 46 percent over the past 12 months, to $58.88 a barrel as of
Tuesday on the London-based ICE Futures Europe exchange.
Especially Challenging
The decline might be especially challenging for many crude-producing countries that had previously used
higher oil prices to finance large increases in spending and now need prices considerably higher than
the $58 a barrel projected for 2015 to cover expenses, the IMF said. Yet the oil price drop presents a
golden opportunity to reduce energy subsidies and raise energy taxes, the IMF said, citing examples of
successful such actions in Indonesia and Malaysia.
The drop in oil prices, together with accomodative monetary policy, is also supporting a moderate and
uneven recovery in advanced economies. Still, inflation below target makes cutting public debt difficult,
according to the Washington-based lender. A lasting solution to the debt overhang problem is not
possible without higher growth and moderate inflation, the IMF said in the Fiscal Monitor. This
underscores the need to continue monetary stimulus and accelerate structural reforms to catalyze growth.
Fastest Growth
The U.S. will expand 3.1 percent this year, the fastest among major developed economies, Japan is
expected to grow 1 percent and the euro area is projected to advance 1.5 percent, the IMF said. Emerging
market and low-income developing economies might be hurt by surprises about the expected interest rate
increase in the U.S., the Fiscal Monitor report said. The euro area needs to simplify fiscal governance,
while Japan needs a medium-term plan that would include targeted stimulus during economic slowdowns,
according to the IMF. In China, a further shift toward domestic consumption and lower reliance on credit
and investment would curb the risks of a financial disruption or a sharp slowdown, according to the
report.
Source: Bloomberg

A one-two punch may be lurking for oil

The S&P 500 finished up another unspectacular session yesterday there hasnt been a move of more
than 1% either direction since late March. And the banks, alas, arent expected to do much to help, it
seems. Weve been arguing that investors might have to wait until the second week of earnings for a
catalyst, since the bulk of companies this week are financial, a sector little impacted by investors
concerns (oil and the dollar), says BTIGs chief strategist Dan Greenhaus.
Another week of this meandering around, then. As Goldman Sachs reminded us recently, energy,
consumer staples and industrials will feel the biggest pinch from that oil/dollar hit. Kimberly-Clark and
Caterpillar are among the names that will enlighten us to any damages next week. What was moving
yesterday was energy stocks, making up the top 10 performers and tracking a 2% jump in oil prices.
BlackRocks Russ Koesterich says integrated oil-company stocks seem to be bottoming, and provided oil
stabilizes by the years end, current prices may represent good long-term value.
That is, if you can navigate the wild ride in crude and the diverging opinions on where prices are headed.
Even the IEA this morning was talking of murkier outlook on supply and demand impacts. RBC Capital
Markets this morning said it still expects oil prices to recover in the second half of this year and into
2016, helped by a pullback in U.S. rig-count drops, non-OPEC supply growth and global demand. They
inched up their Brent forecast to $60 from $57 this year, and called $54 for WTI, from $53. Granted,
those arent huge changes, and it pulled back a little on 2016 forecasts. But then youve got Citi talking
about Brent breaking its $55-$60 trading range to the downside this quarter, and WTI will buckle below
$50/barrel. Is that stabilization? Citi also warns that if we dont see a big rebound soon, ETF holders
could ruin it for everyone. Read more in our Call of the Day. Futures are moving up this morning after
some potentially bad news is good news from China. Unless the ECB spoils the party.
Key market gauges
The big thing that happened overnight was a slowdown in China growth, but also weakness for a bunch of
other numbers. That triggered weakness across Asia with the Shanghai Composite Wall Street is perking
up, with futures on the Dow and the S&P in the black. Europe is up, with higher oil prices also boosting
shares there. Gold is dipping, while crude is also up, with the IEA talk of better demand in 2015 helping.
The quote If you count the time Im in the office, its probably no more than 50-60 hours a week. But if
you count all the time Im focused on our mission, thats basically my whole life. Facebook CEO
Mark Zuckerberg on his work day during last nights ask-me-anything session.
The economy
The Empire state index dropped to a negative 1.2 in April, the lowest since December. Industrial
production and capacity utilization are coming at 9:15 a.m. At 10 a.m., a home builders index for March,
and then the Beige Book at 2 p.m. A couple of Fed speeches are on tap as well: St. Louis Fed President
James Bullard (non-voter) in Washington at 9 a.m., then Richmond Fed President Jeffrey Lacker in
Charleston, S.C. at 7:30 p.m. An ECB presser was temporarily has halted after an apparent glitterbomb
attack on Draghi protestor attackedis also on today and investors want to know if theres been a revision
in the central banks QE exit strategy.
The call
Chatter has been coming fairly fast and furious on the oil front lately, especially given the rebound in
prices. Citi appears alarmed in its latest note, warning investors against generalizing over single data
points, such as weekly data that breaks a trend line.
Case in point: This week, the market took perhaps EIAs combined monthly report and summer fuels
outlook pointing to a decline in Bakken, and therefore U.S. shale output, indicating that the U.S., the key
non-OPEC supply driver might finally be seeing the impact of lower drilling, said Edward Morse and the
team at Citi. Yet North Dakotas Bakken production is expected to surge in the second and third quarters
of this year, as that state puts the screws on companies to complete wells and rolls out some new tax
incentives, says Morse.

Also, long oil ETFs have reached a total market cap with leverage of around $9 billion, up an eyepopping 600% gain over the year, and these investments have created a lot of froth around front-month
prices for Brent and WTI, says Citi. But net longs have been pulling back a little from recent peaks. And
in a contango market, where the spot price trades lower than contract prices for future delivery, ETF
holders are losing money as the new contract rolls over, Morse explains. So if crude prices dont start to
see a bigger rebound, more investors in oil-based ETFs could be headed for the exit. Note that hedge
funds also have been making massive bets on the oil-price rally. BNP was also warning on oil prices
earlier this week, saying it sees another leg down and a rough April. Thats once the market wakes up
over fundamentals, such as the scope for another big inventory builds before the industry hits its summer
strike in May/June.
Source: MarketWatch

Why are oil prices fluctuating?

From February to mid-March, oil prices receded rapidly. WTI dropped by 22 per cent in six weeks. Brent
crude was down about 15 per cent. Then, in the past four weeks, the oil inched back up to the price levels
at the start of February. Late January, Baker Hughes data showed US rig counts had fallen significantly in
the preceding six months. This was expected to help curtail supply, and lead to an increase in prices.
Along with this, the impact of weather in Iraq and violence in Libya curtailed production and lead to a
rally in prices in January. Even though the rig count had reduced from a peak of about 1,600 to 900 in
March, during the same time oil production went up from about 9 million barrels a day (mbpd) to 9.37
mbpd, the highest level in the US since 1982. This was because the producers were focusing on their most
productive wells and increasing output from them. In April, Barker Hughes reported the rig count had
further reduced to 760. Now, production trend seems to changing as well. EIA estimates that output from
two big shale plays in the US, Eagle Ford and Bakken, are expected to decline in May while output from
Permian will continue to grow. Deutsche Bank, in a report, suggested that US production will hit an
inflection point in May. People are arguing that the rig count reduction (factored in for productivity gains)
will finally start showing its impact on reduced US production in later half of this year. This along with
the risk premium caused by tension in middle east over Saudi-led attacks on Yemen is adding a premium
to prices. Yemen itself is not a significant producer of oil but next to it passes the fourth busiest oil
shipping bottleneck of the world.
At the same time supply disruptions from Iraq and Libya have reduced. Over this time, the US stockpiles
have built up to record levels, getting to the highest inventory level in last 33 years with the hope that as
soon as oil prices recover they can sell it. There is also a big invisible inventory that is building up. A
number of producers are leaving their wells almost complete but not starting production from them. This
means that a huge amount of oil is available to start production. Wood Mackenzie and RBC Capital
Markets estimate that over 3,000 wells have been drilled but not tapped. Then, there is the possibility of
Iran ramping up production in case the US-Iran talks end up being positive and ease the sanctions. Iran,
says it can ramp-up production by 1 mbpd within a few months of sanctions being lifted. Experts suggest
it may be more reasonable to assume that Iran can only ramp up production by 0.3 mbpd and to get to 1
mbpd will be a longer cycle. Besides, while the US rig count has been declining Saudi rig count has gone
up 5-6 per cent. It is also reported that Saudi production has increased to 10.3 mbpd the highest in last 13
years. In Russia, as the small simple refineries called teapots get dis-incentivised to process crude, up to
250,000 barrels per day may become available for sale. As per Bloomberg, loadings from Russian ports
were 9.5 per cent higher in the first quarter of 2015 over last year. Along with this the short term demand
from China may be tapering off. Reports suggest that China may have filled their current strategic
reserves and will buy more only after construction of additional strategic reserve storages. The
oversupply, the pending US interest rates hike and the associated dollar strength can all add to downward
pressure on oil prices.

Till now, we have not really seen production ramping down because OPEC is not backing down and shale
producers are producing more to meet their cash flow obligations. Long-term supply will be impacted by
35-40 per cent cut in capital expenditure by oil companies in 2015. Shell, for instance, said it would cut
spending by $15 billion. Chevron announced a cut of $5 billion. As the refinery maintenance season ends
in the US, the demand should go back up, and high stockpiles should start reducing. In the medium term,
the reduction in rig counts should start resulting in less supply from new fields, and in the long term the
reduction in capital expenditure should taper off supply growth. However, in the short term, the
inventories will prevent an immediate and sharp price rise even after production falls. Crude may see
modest gains in price through end of this year, however, it will take a while before oil scales $100 again.
Source: Business Standard

Canada Seeks New Crude Customers as Keystone Pipeline Languishes

Canada is seeking new customers for its crude oil as a U.S. review of the Keystone XL pipeline drags on
and oil prices languish near $50 a barrel, the countrys Natural Resources Minister Greg Rickford said.
Canada sells nearly all of its oil and natural gas to the U.S., a partnership that amounts to a $140 billion a
year business, Rickford said Tuesday at the Bloomberg New Energy Finance Future of Energy Summit in
New York. A downturn that has seen oil prices fall about 50 percent will cost Canada $40 billion a year,
according to data compiled by Bloomberg. Ninety nine percent of our oil goes to the United States right
now 98 percent of our natural gas, Rickford said. I dont think anyone in business would want just
one customer.
Lower crude prices have reduced our fiscal flexibility, he added. Oil exports to the U.S. will rise,
peaking at 7 million to 8 million barrels a day, Rickford said. Even as sales to its largest customer
increase, Canada is seeking to diversify exports. Future oil sales to the U.S. depend in part on
TransCanada Corp.s planned Keystone XL pipeline, a project first proposed in 2008 that is awaiting a
U.S. presidential permit. Keystone, which has stalled over environmental concerns, would enhance U.S.
energy security by displacing exports from countries like Venezuela, Rickford said in speech at Tuesdays
summit.
The pipeline will ensure that U.S. refineries have access to a secure supply, Rickford said.
Keystone would transport 830,000 barrels of oil a day from Alberta to Steele City, Nebraska. As the U.S.
State Department continues its review, alternative pipelines have been proposed to Canadas west coast to
enable exports to Asia. U.S. oil imports are expected to decline through 2020 because of rising domestic
production from shale formations, the U.S. Energy Information Administration said Tuesday in its 2015
Annual Energy Outlook. Net imports of petroleum and other liquids is expected to drop from 26 percent
in 2014 to 15 percent in 2025 and then rise to 17 percent in 2040.
Source: Bloomberg

Oil Historian Yergin Sees Prices Locked in W Formation

Oil historian and economist Daniel Yergin has a forecast for where the price of crude is headed: all over
the place. The much debated shape of the oil-price curve will take the form of a W as crude is whipsawed
by mixed signs from a rattled U.S. shale boom, while Saudi Arabia refuses to balance a global supply
glut, Yergin said in an interview.
As spending cuts are forecast to begin easing production from shale next month, the fate of world oil
markets is largely in the hands of a myriad of U.S. wildcatters, all with different strategies and an unusual
ability to respond quickly to changed circumstances. Ramping down will be quicker and easier than
stepping up production as prices recover, said Yergin, vice chairman of IHS Inc. Increased supply will

renew downward pressure on prices and volatility will be exacerbated by storage and investment
decisions, he said.
Its not a light switch, he said of the producers response to an oil price slump, one of the themes to be
discussed at next weeks IHS CERAWeek energy conference in Houston. There isnt going to be a
landing place for oil. Yergins view is in line with those of other forecasters and analysts including Wolfe
Research LLCs Paul Sankey and ARC Financial Corp.s Peter Tertzakian. Sankey, a former International
Energy Agency analyst, has said the oil price curve will follow the pattern of a sharks tooth in the
medium term. Thats because it will take time for crude produced at higher cost to come out of the
market. Oil stored in anticipation of higher prices in the future will also put a ceiling on a near-term
rebound, he wrote Feb. 13. Tertzakian has called it a seesaw recovery.
Momentous Year Yergin, author of The Prize, identified this year as one of the most momentous in the
history of the commodity. Demand growth from China, perhaps the biggest reason for oils meteoric rise
in the last decade, has slowed. Meanwhile, risk to supply abounds in producing countries, from the proxy
war being waged in Yemen by Iran-backed rebels and Saudi forces to ongoing tensions between Russia
and Ukraine, he said. There is a lot of risk in the world, but there isnt much of a risk premium in oil,
which is unusual, he said. There is so much oil, the supply of it is so great that the fear of supply being
disrupted in some fashion is very small.
The past several years, in which North America surpassed Russia and Saudi Arabia as the worlds largest
producer of oil and natural gas, are only the fourth time since the early part of the 20th century that theres
been such a sudden surge, he said. Previous instances include the flood of new oil from East Texas in the
1930s, and again in the 1950s from the Middle East and more recently from North Sea and Mexican oil.
The market accommodated each sudden surge with a price collapse, he said. Upward Path The path to
higher prices could come as capital-spending cuts and reduced investment now equate to delays in
bringing new production projects online by major oil companies, he said.
The oil market is cyclical, supply and demand are not always in balance, he said. Will there be the
sufficient long-term investment to keep the market balanced? This is still very early days as companies
are making their adjustments. It remains to be seen whether demand will surge in the downturn, and
Saudi Arabia appears to have that among its foremost considerations in deciding to let the market resolve
itself, Yergin said. Demand is a real question mark, he said. Lower prices will stimulate demand, but
the question is how much.
Source: Bloomberg