It was more than forty years ago (1981) when I became an oil futures broker on the nascent International Petroleum Exchange.
In the preceding five years I’d learned about the sugar market and, more importantly, how futures markets work. I disarmingly told potential oil clients I knew nothing about their business but I did know about futures markets and we should pool our knowledge. This seemed to go down well and Czarnikow landed many clients who stuck with us over decades.
Usually I digress but this morning I have bragged – I hope it will not become a habit. However, in case you are missing a digression read on. Watching The Crown over a TV supper with Robert I saw my Czarnikow boss’s daughter in the role of Fiona (now Lady) Shackleton.
I got to vaguely understand the often murky world of oil trading in the 1980s. After that it became a bit more transparent. One thing I could not understand was how the main oil suppliers (OPEC) could operate a cartel as OPEC + still does. Well, what’s sauce for the goose is sauce for the gander and there’s a new cartel.
It is most illegal to collude on pricing. That sounds a bit Damon Runyan. So how legal is it to put a price cap of $60 on buying Russian oil? But that’s not my point. It is madness because there will be a two tier market and a lotta oil traders are going to make big money. If you have a long memory you will recall oil being priced in the US as either “new oil” or “old oil”. Marc Rich made so much money out of this anomaly he had to live in Switzerland to keep out of jail before receiving a controversial presidential pardon from Clinton in 2001. To digress, in a fairly civilised democracy I cannot understand how a “Get Out of Jail Free” card can be handed out by an outgoing president. In the UK honours given by retiring PMs are bad enough.
So top tip is to buy Russian oil at $60 and sell it on at the real price to buyers outside the US and EU. I remember I had a client who did this in an African country in the 1980s – another story. There’s nothing new, is there pussy cat?