“Analysts have called the breakdown of Opec+ and the lifting of the supply cuts that kept the oil market balanced in the last two years anything from a spectacular blunder to collective suicide. A new model of the oil market led by the inventors of mean-field game theory, Fields Medal laureate Pierre-Louis Lions and Jean Michel Lasry, suggests otherwise. The sell-off will hurt producers all around but will bring Riyadh and Moscow longer-term benefits. With their low costs and vast financial reserves, the two can withstand a loss of oil revenue better than most producers. Others are already teetering on the brink of collapse. Sanctions-hit Iran is a case in point. The real prize for Opec however is the taming of shale oil. It suddenly looks within reach. Long an Opec critic, the US is turning into an unlikely cheerleader.”
-Antoine Halff, chief analyst at Kayrros and a research scholar at Columbia University’s Center on Global Energy Policy, writing in the Financial Times. [ft.com]
