My latest trip to London may have centered on the briefings I gave on Iranian oil sanctions, but I also did a number of media appearances.
As I have mentioned before, questions from European interviewers are generally more knowledgeable and to the point than in the states. This may be because places like London are much closer to the events directly affecting oil prices.
However, there was a surprising element.
Nobody - be he/she a commentator, journalist, analyst, or expert - expected a fall in oil prices. The entire market environment in Europe is looking in the other direction.
In London, my predictions of $130 a barrel for Brent and $115 for WTI (West Texas Intermediate, the benchmark crude traded on the NYMEX) by the end of 2012 were considered on the low side.
My further suggestion of $150 for Brent and $130 for WTI by the end of 2013 have caused some disagreement in the states, but are par for the course averages for what people are saying over in Europe.
In fact, the overwhelming consensus in Europe is that oil will rise, absent exogenous economic or financial problems.
In other words, the price can go down, but such a move would be a result of another bout with credit crises, intra bank problems, or currency weakening.
In such situations, the lowering of oil prices has nothing to do with oil, or its supply/demand balance, or its trade. Rather, economic constriction results in concerns over short and medium-term demand and those translate into a lower price.
Left on its own, the consensus over here is simple. Oil goes up.
Concerns Grow in Europe Over Oil PricesNow, unlike in the U.S., the conversation does not then immediately move to prices at the pump.
Gasoline is less of an issue for the simple reason that a combination of heavy taxation, lowered usage and a far better mass transit system has made driving more of a luxury than in the U.S.
Paying the equivalent of $7 a gallon tends to have that effect.
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Iran Talks: A False Dawn for Oil Prices?
Kent Moors, was in usual good form just now on “The European Closing Bell” from Frankfurt, Germany, talking about the problems in Iran, the restriction of oil through the Strait of Hormuz, how it affects worldwide production and ultimately, the price of oil.