Letter from the US: Financial contagion and the oil industry – What, me worry?

Banks’ stricter lending policies will force refiners and marketers to hold fewer stocks, putting a squeeze on the oil industry

Just as in the past, the oil industry today seems blind to clear danger signs from outside sources. Oil executives and ministers are either blissfully unaware of or consciously disregarding significant problems, not the least of which is a financial system on the brink of disaster. The officials from oil firms and trading companies were in fine form in this regard at the FT Commodities Global Summit in March. For example, one trader told his audience: “The type of assets that we can bring to the banks’ balance sheets are exactly what the banks need.” As banks watch their assets melt away, the last thing they are interested in is oil trader assets. The industry has yet to acknowledge this cha