Turkey, Saudi, $200 Oil ... Brex and the City

As the Saudis threaten to lash out crazily at, errrr, everyone, and talk of $200 oil is in the air (Putin tried talking that one up a decade ago), it does at least look as though the price will remain firm for a while to come.  Venezuela and Iran aren’t going to be contributing much to a downside secnario for a while at any rate.

What’s this to do with Brexit?  A couple of things.  The less interesting one (to me) is that the German car industry is already anxious enough, and it can’t hurt the negotiations to have them putting a bit more pressure on Merkel/Barnier to offset their $100+ oil concerns.

More interesting is what happens in the oil & gas investement / M&A sectors.  Returns on this sector have not been so great for a while, and equity investors looking for big profits have gone elsewhere.  There has been a steady deal flow, both debt and equity: but without doubt there’s scope for a whole lot more: and $100 oil will bring forth a heap of renewed interest.

Here’s the thing:  most of this action goes to the City of London – and that ain’t gonna change any time soon.  No amount of PR in Paris and Frankfurt is going to undermine London’s gigantic advantages in these matters.  And nor will Brexit, IMHO.  To the contrary: it may even free up the City – there are currently at least some Brussels constraints on finance – to be even more flexible and creative than it is already.  As in most regulatory matters, be that finance or energy, British regulators are a great deal more nimble and responsive than any others.  

Now: personally I’m a consumer and $100 oil is not a great prospect per se.  But it’ll hurt more in Eu: and I don’t see the City complaining.  Why, even the dour Scotties may raise a smile …

ND