“David, would you please describe to subscribers exactly what it means to be the "swing producer" of crude oil? I recall it being mentioned at some point that the U.S. held that role until approximately 1970, and we know what happened a few years after that. Perhaps you could also measure the degree of control today's swing producer has and whether it is strengthening or lessening. Perhaps you also might look around a few corners and humbly estimate what 2025 might look like.
“Nice call on all things equity these past 7 weeks.”

David Fuller's view

Thanks, not least for your interesting questions.

A swing producer will be the dominant producer which also has low production costs.  That country can and will raise or lower production output, ideally in line with global demand.  The US had once been the swing producer but that role was really just a memory by 1970, and it mainly came from companies.  Saudi Arabia was the swing producer at that time and it was one of the founding members of the Organization of Petroleum Exporting Countries (OPEC) in 1960.  Prior to that, the international oil market had been dominated by multinational companies, known as the “Seven Sisters”, consisting of the Anglo-Persian Oil Company (now BP), Gulf Oil, Royal Dutch Shell, Standard Oil of California (SoCal), Standard Oil of New Jersey (Esso), Standard Oil Company of New York (now ExxonMobil) and Texaco (now Chevron).

As for what might be around the corner in 2025, this is, of course, really creative guesswork rather than analysis.  My views on this topic are little changed from what I have been saying, on occasion, for the last several years in my Big Picture, long-term Friday Audios.  Here is a brief update and summary.

All but the most governance challenged stock markets will be much higher by 2025.  This will be due in small part to inflation.  However, the big factor will be the next secular bull market which I have often mentioned.  That will largely occur in response to the accelerated rate of technological innovation.  The next most important factor will be lower energy costs in real terms, as a consequence of new technologies.  Other drivers of the secular bull market will be the continuing adoption of capitalism by governments, whether of the democratic or command variety, plus globalisation, the increasing global population and rapid growth in the world’s middle classes.        

Meanwhile, the next few years could be a little more challenging.