RCEM: Views on Energy News

Thanks to ESCP Europe's Research Centre for Energy Management's  wide network in the academic and business communities, our views on energy news give you comprehensive insight into energy issues. 

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Oil is at the heart of Iran’s nuclear programme. Iran needs nuclear energy to replace the crude oil and natural gas currently being used to generate electricity, thus allowing more oil and gas to be exported. Without nuclear power, Iran could be relegated to the ranks of small exporters by 2020 with catastrophic implications for its economy and also the price of oil.

Iran would doubtless not be averse to possessing nuclear weapons. There is an element of security and also logic involved with Iran’s quest for nuclear weapons. Even the recent nuclear agreement will not shift Iran an iota from its determination to acquire nuclear weapons. 

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The crude oil price has lost 54% of its value since September 2014 and there are no indications that it will stop there in the absence of a major production cut by OPEC. It is not inconceivable that the price could even slide to $40 a barrel.

The reasons given so far for the steep oil price decline is glut in the global oil market caused by rising US shale oil production and a slowdown in economic growth in China and the European Union (EU) reducing the demand for oil. This was exacerbated by OPEC's very wrong decision not to cut production by at least 2 million barrels a day (mbd) to absorb the glut in the oil market. Had they cut their production, Russia and Mexico would have joined them and cut production by 500,000 barrels a day (b/d) and 300,000 b/d respectively, a total of 2.8 mbd capable of removing the glut and stabilizing the oil price. It is not too late for OPEC to reverse their earlier decision and cut production. Failure to do so could push the oil price down possibly to $40/barrel.

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There is a great hype aboutBrazil's pre-salt oil potential and the impact it will eventually have on the global oil market. Some sources say that it could vault Brazil to seventh place in the world rankings in terms of proven oil reserves behind Saudi Arabia, Venezuela, Iran, Iraq, Kuwait and United Arab Emirates. Others claim that Brazil could emerge as a major oil producer and exporter and that will certainly change the balance of oil distribution in the world.

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