Normally you would see the massive shortfall where ~15% of global oil demand needs to be destroyed by price increases, and you would then assign the risk that happens, and take the integral over your risk distribution times your pricing scenarios.
However, two things are going wrong:
markets wildly overestimate Trump’s words and ability to resolve this, so are mis estimated risk
oil execs are happy with the extra income
So they’ve put off the price increases entirely because of hubris.
they’ve put off the price increases entirely because of hubris.
They also don’t want to bite the hand that feeds them. They know that oil prices are the only thing that the majority of Americans really care about when it comes to politics. They also know that the trump administration is more than willing to cut down any government regulation or energy competitors they want. Keeping the public happy domestically and selling exports overseas for significant profits works out fine for them. They know who butters their bread.
Normally you would see the massive shortfall where ~15% of global oil demand needs to be destroyed by price increases, and you would then assign the risk that happens, and take the integral over your risk distribution times your pricing scenarios.
However, two things are going wrong:
So they’ve put off the price increases entirely because of hubris.
They also don’t want to bite the hand that feeds them. They know that oil prices are the only thing that the majority of Americans really care about when it comes to politics. They also know that the trump administration is more than willing to cut down any government regulation or energy competitors they want. Keeping the public happy domestically and selling exports overseas for significant profits works out fine for them. They know who butters their bread.