OPEC initiates a price war; implications
OPEC initiates a price war; implications. OPEC has historically supported oil markets by curtailing production in periods of oil price weakness. Their systematic approach worked well to balance oil markets when oil prices collapsed in 1998-1999, in 2001 and again during the GFC - as illustrated in the chart below. By willingly allowing the oil price to remain weak, OPEC and namely the Saudi's have essentially started a price war with US shale oil production. Key OPEC members Saudi Arabia, Kuwait and UAE all boast production costs averaging ~US$20/bbl, substantially less than the marginal cost US shale producers, some with production costs of up to US$80/bbl. The Paragon Fund November Monthly report looks at this price war in more detail and reviews a short position in Santos (STO) and a long position in Qantas (QAN). Click on the link to access the full report: (VIEW LINK)
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John co-founded Paragon in 2012 and became principal and majority shareholder from 2017. John is responsible for executing the investment strategy and managing the Paragon Australian Long Short Fund. John has had 16 years in financial markets,...