Oil price crash: winners and losers

Low oil prices cause North Sea fields to close.

Low oil prices cause North Sea fields to close.

Published Dec 5, 2014

Share

New York - Oil prices around the world have fallen more than 38 percent since the year's high in June.

Among the winners:

* Airlines, which are saving on fuel and not reducing fares for customers. Bank of America predicts earnings will gain 73 percent in 2015.

* Saudi Arabia. The desert kingdom flexed its muscle at November's OPEC meeting by overruling other members, showing that it's still the dominant producer. Saudi Arabia needs oil at $83.60 a barrel to balance its budget, according to the International Monetary Fund, but it's got $736 billion in reserves.

* Apollo Global Management. The New York buyout firm run by billionaire Leon Black, announced the sale of shale driller Athlon Energy Inc. on Sepember. 29 - before oil dropped 29 percent.

* American motorists: $3 gas? $2 gas!

* Pierre Andurand, a 37-year-old London hedge fund manager, piled up an 18 percent gain in November betting against oil.

* China. The world's second-biggest importer is taking advantage of slumping prices to build up strategic stockpiles. Cheaper fuel could reverse China's slowing economy and make it easier for the central bank to cut interest rates.

* Ed Morse, Citigroup's head of commodities research. Morse said early and often that surging U.S. oil production would drive down prices. His prediction of $75 a barrel went further than other analysts. Now it seems quaint.

The losers include:

* Russia, where the joke about Vladimir Putin's age, the oil price and the ruble's value against the dollar all hitting 63 next year has Russians laughing. Nervously.

* Iran, already hamstrung by sanctions over its nuclear program, needs oil at $130.50 a barrel to balance its budget, the IMF estimates. The price was less than $70 a barrel Wednesday.

* Cheaper oil challenges the economics of developing Canada's oil sands. Calgary-based TransCanada Corp. hopes to build the Keystone XL pipeline to bring that oil to the U.S. Gulf Coast. Some say the industry has already moved on.

* Venezuela. The lower price of oil is a disaster for Venezuela, where civil strife and a devalued currency could be next for the weakest member of the Organization of Petroleum Exporting Countries.

* Drilling in some regions of Texas, Oklahoma and North Dakota is unprofitable at current prices. Those hardest hit include independents like Halcon Resources Corp., Goodrich Petroleum Corp., both based in Houston, and Oklahoma City-based SandRidge Energy Inc.

* Railroad stocks fell as investors bet that lower oil prices would curtail rail shipments, which have been surging — and accident-prone.

* Harold Hamm, one of fracking's leading cheerleaders and the founder and chief executive officer of Oklahoma City-based Continental Resources Inc., has lost more than $12 billion in three months - half his fortune, according to the Bloomberg Billionaires Index.

“Nobody's going to go out there and drill areas, exploration areas and other areas, at a loss,” Hamm said.

Bloomberg News

Related Topics: