Price Setting

Question 1

What is the effect of geopolitical shock on the natural gas price?

Answer 1

High volatility on price = increase in natural gas

Question 2

Is it possible to invest on a short run ? Explain

Answer 2

No investment is possible on the short run due to a long time for investments to generate a return, a lot of uncertainty about the future and difficulties to get the financing needed to make an investment.

Question 3

explain the cycle of the long run investment.

Answer 3

oil price decline with the cost cutting rationale allow the prolongation of low price which favors a strong demand and the need of an oligopolistic market and supply management. However, the contraction in investment and fall in the Reserve / Price ratio turn the market into under-capacity which favors the price recovery. The addition of the cost inflation prolonged high price which lead to a boom in investement and R/P ratio turn the market into over- capacity due developemnt of alternatives that decrease the price (Competitive market & demand destruction)

Question 4

Explain the forecasting mechanism of oil price.

Answer 4

Passenger cars & commercial vehicles are the divers of the oil price forecasting to determine the consumption in terms of oil by types of vehicles and economic activity. Use of linear regression to perform forecasting for HFO demand. However, this require to supply (upstream commodities) that will be refined after appraisal

Question 5

By 2040, what will be the demand for petrochemical and transport?

Answer 5

21% (+ 0.9 % /year) and 77% (1% / year) respectively

Question 6

what are the main suppliers of global oil and their increase in Mb/d ?

Answer 6

Irak (+5.5)
Canada (+4.3)
Brazil (+3.6)
USA (+1.8)