The oil industry's recovery is now in the hands of politicians
Covid-19, renewable energy and geopolitical tensions have created an uncertainty that oil might not fully recover from.
THE price of oil today has been decimated by the Covid-19 pandemic. There is significant excess capacity in oil and related product inventories that will need to be absorbed before product prices can recover and prices can rise sustainably.
This uncertainty will cause a volatile period for both oil prices and oil-related investments. Investors will likely see subdued oil prices for the next 12 to 18 months, but can expect that oil will not regain the highs of the past three years for a long time.
It will be critical for investors to carefully consider both the ramifications of political events, the exposure of companies exposed to oil-producing countries, and a new set of factors underpinning the speed of recovery in oil prices.
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