Brent oil fell last night by more than 2% to roughly $63 as Saudi Arabia stopped bombing Yemen, claiming to have neutralised rebel heavy weapons. Iran was also bullish on restoring its production flow mid this year once sanctions are lifted. There are also moves afoot to free up more US oil exports, which would close the WTI/Brent spread.
On the oil price slump, Noble CEO Yusuf Alireza said “the traditional [Exploration & Production] player has a very high capex and low opex so the marginal cost of the barrel is very low, and when you have that kind of dynamic you have a very steep supply curve, whereas shale is much more of a manufacturing activity.”
He added: “You have to force the oil out of the ground. Which means, you have more opex, the higher cost of opex, which means you have a player in the market that really is a swing producer, which can react to effectively higher prices, to lower prices.
