Middle East risk and oil premium So...a while back I don't recall the date Eric was on a call and mentioned why there never seemed to be a premium risk factor for oil given the challenges and problems that occasionally pop up.
I thought that was interesting right or wrong I wasn't sure so I thought I would reach out to a couple oil traders. Anyhow both of their response were almost identical...while Eric may think it's risk on macro level it is almost never material. They said for instance a VLCC holds maybe 2m barrels...something like that and that is completely immaterial to the market usage. They also said take even the attack on Saudi facilities recently...it had little mid to long-term impact. It was short term only.
Anyhow at the end of the day much to the comment from Eric it's just not material.
As reported in the New York Times..."Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely"
https://www.nytimes.com/2019/09/15/business/saudi-arabia-oil-energy-prices.html
People just don't see the risk.
Like COVID I guess you think there is risk in mass lockdowns based on the media from the last few weeks....however Friday close seemed to suggest near $74 WTI that traders don't care (for now).
So for now BTE makes big cash while the market shrugs it off (for now).
That said what ifs and hypotheticals are always great discussing. My crystal ball needs a good dusting for that.