Our oily near-future

KYSTVERKET/AFP/Getty Images Over the last few weeks, there’s been a lot to digest in the oil world, particularly as presidential candidates traveled through cold New Hampshire with heating oil futures pushing $2.70 per gallon. And, of course, the infamous $100/barrel crude oil price.  The debate over the role of trading will not go away, particularly ...

597247_oiltanker_05.jpg
597247_oiltanker_05.jpg

KYSTVERKET/AFP/Getty Images

Over the last few weeks, there's been a lot to digest in the oil world, particularly as presidential candidates traveled through cold New Hampshire with heating oil futures pushing $2.70 per gallon. And, of course, the infamous $100/barrel crude oil price. 

The debate over the role of trading will not go away, particularly because it appears that a trader overpaid slightly to push the price into the triple digits and claim to be the first to buy $100 oil. With that in a mind, here are a few threads to think about.

KYSTVERKET/AFP/Getty Images

Over the last few weeks, there’s been a lot to digest in the oil world, particularly as presidential candidates traveled through cold New Hampshire with heating oil futures pushing $2.70 per gallon. And, of course, the infamous $100/barrel crude oil price. 

The debate over the role of trading will not go away, particularly because it appears that a trader overpaid slightly to push the price into the triple digits and claim to be the first to buy $100 oil. With that in a mind, here are a few threads to think about.

While oil prices have fallen from their highs, the supply outlook in two key producers doesn’t look so hot. Russia looks to stay roughly flat this year. And it appears that Mexico’s production is unlikely to pick up to the say the least, as the state-run Pemex appears to be in dire straits. Pemex General Director Jesus Reyes Heroles says: “The situation of Petróleos Mexicanos is critical and merits immediate attention.”  

The upstream (getting it out of the ground) segment of the oil industry today is shaped by resource nationalism, high prices, and supply constraints. These three things together mean that oil rich countries want the latest in upstream oil technology but would rather not deal with the western oil majors. BusinessWeek has an excellent story on Schlumberger, a high-tech oil services firm that is thriving in this new environment. 

Just to keep you on your toes, John Cassidy argues in Portfolio that the dynamics of supply and demand will push oil prices down to $50 within the next three years. That’s not an extreme position, as I’m sure some would argue that a recession in the United States could make $60 a reality this year. 

But if prices continue to stay in this general high-ish area, keep an eye on the budgets of developing countries with fuel subsidies. India is running up a huge subsidy bill already, and Indonesia and Malaysia feeling the pain as well.

More from Foreign Policy

A Panzerhaubitze 2000 tank howitzer fires during a mission in Ukraine’s Donetsk region.
A Panzerhaubitze 2000 tank howitzer fires during a mission in Ukraine’s Donetsk region.

Lessons for the Next War

Twelve experts weigh in on how to prevent, deter, and—if necessary—fight the next conflict.

An illustration showing a torn Russian flag and Russian President Vladimir Putin.
An illustration showing a torn Russian flag and Russian President Vladimir Putin.

It’s High Time to Prepare for Russia’s Collapse

Not planning for the possibility of disintegration betrays a dangerous lack of imagination.

An unexploded tail section of a cluster bomb is seen in Ukraine.
An unexploded tail section of a cluster bomb is seen in Ukraine.

Turkey Is Sending Cold War-Era Cluster Bombs to Ukraine

The artillery-fired cluster munitions could be lethal to Russian troops—and Ukrainian civilians.

A joint session of Congress meets to count the Electoral College vote from the 2008 presidential election the House Chamber in the U.S. Capitol  January 8, 2009 in Washington.
A joint session of Congress meets to count the Electoral College vote from the 2008 presidential election the House Chamber in the U.S. Capitol January 8, 2009 in Washington.

Congrats, You’re a Member of Congress. Now Listen Up.

Some brief foreign-policy advice for the newest members of the U.S. legislature.