The watchdog overseeing banks in western Europe’s biggest oil exporter says Norway’s financial industry may still be underestimating the risk of losses, even after a 70 percent recovery in crude prices since January.
Oil rebounded from the lowest level in more than 12 years amid the highest price volatility since 2009 as speculation swirls over whether producers will act to bolster the market.
Oil gained after Russian air strikes in Syria drew condemnation from the US and its allies, increasing tension in the Middle East. Futures in New York advanced as much as 2.2 percent. Russian planes are targeting Islamic State, al-Qaeda affiliated Nusra Front and other armed groups, Foreign Minister Sergei Lavrov said Thursday. US data Friday may show the labor market is improving in the world’s biggest oil user, with 201,000 jobs added last month, according to a Bloomberg survey. “We need to start putting some geopolitical risk premium in the oil price,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said in a note. “There are many countries active in some way in Syria and it is not yet clear how each will react to the increasing Russian open military action.”
The speed at which oil wells spitting out their final drops of unprofitable crude will be shut may hold the key to an eventual rebound if prices fall further. Crude prices tumbling to $30 a barrel would threaten the profitability of about 206,000 barrels per day of production from older wells that produce minimal amounts of oil, according to a report.