The arrival of sub-$40-a-barrel oil has caused more than a few members of the OPEC cartel to splutter about the need to cut production to force prices higher. So far, Saudi Arabia isn’t listening.The strategy is to keep pumping, apparently in the hope of forcing the US shale industry – whose impact Opec underestimated as late as 2011 – to curb production. Non-Saudi members may therefore be alarmed that even the organisation’s own economists don’t exactly envisage US shale producers being forced to their knees....Indeed, the projections show North American tight oil volumes increasing from 4.4m barrels a day at present to 5.2m barrels in 2020. From a Saudi perspective, that forecast could be taken as yet another reason to keep pumping to protect Opec’s share of the market. One of these years, lower levels of investment, which always follow lower prices, could produce a spike in prices and the report, rightly, warns of the danger. It suggests $10tn (£6.7tn) of investment will be needed between now and 2040 and that the “right signals” – meaning higher prices – will be required. But a spike in 2016? That is hard to imagine while Opec’s members squabble before the Saudis get their way...The oil price has bugger all to do with stopping fracking. How could that be the reason when low prices hurt both US fracking investments and Saudi wealth... Saudi Arabia being almost entirely dependent on oil to finance government expnediture. Look further at Iran and Russia. The US used low oil prices to help to bring about the economic collapse of the USSR and are merely trying to do the same thing again. The Saudis are just doing what they are told.
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