Hedging against growing risks in oil and gas lending

April 7, 2020 Lauren Harrell
BAI Banking Strategies
 



Hedging against growing risks in oil and gas lending
April 7, 2020

 

The price of oil is down more than 50 percent from where it was when the year started, with most of that collapse coming in March. We haven’t seen crude slide so far so fast since the first Gulf War in 1991, and we can expect more volatility at least in the near term.

Oil is being hit on both supply and demand. On the supply side, there is a price war between Russia and Saudi Arabia after they failed to reach an expected deal to cut production and maintain prices. The three-year partnership of OPEC + broke apart as a result. Both sides have stated they will flood the market with production to levels not seen before. On the demand side, COVID-19 has had a dramatic impact on travel (airlines, other transports, etc.) as countries respond to the virus and try to contain spreading.

About the Author

Lauren Harrell

Lauren Harrell is Head of Commodities for the financial institutions business. She has over 17 years’ experience with financial institutions and has supported clients with interest rate hedging in addition to holding roles within lending, commercial credit and underwriting, financial statement audits/internal controls, funding, liquidity, and ALM/ALCO. Lauren graduated with a BA in Criminal Justice from UNC Wilmington and received an MBA in Finance from Gonzaga University. She is a graduate of the ABA Stonier Graduate School of Banking, holds her CPA license and is a CFA Charterholder

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