The New Oil Cartel Is An Unexpected One
As those with oil heating celebrate the lowest oil prices for many a winter, it is becoming increasingly obvious that the control of the oil market has passed from OPEC to the world's credit markets. No major oil producer or company is economically self-sufficient at present, based on revenues from oil alone, so bankers rather than oil men are now in charge.
The idea that bank loans to oil companies may be dicey is not new, but there are signs that these distress energy loans could end up as messy defaults. Although nations like Saudi Arabia won’t forfeit their assets to creditors, their ability to keep running deficit funding is going to depend more and more on the appetite of the bond market for energy related debt, creating problems in 2016.
With the Federal Reserve beginning to rai...