The Strategy of the main OPEC State, Saudi Arabia, not to reduce the daily production of oil amid the global crisis of overproduction which led to a 50% fall in prices on international markets seems to bear fruit. That’s because the price difference between Brent crude, the benchmark in London and worldwide, and assortment West Texas Intermediate, the US benchmark, has reached more than $ 2 / barrel to almost $ 16 a year latter, thus reducing the competitiveness of US oil extracted from shale.
Saudi Arabia’s strategy seems to work. Narrowing price differential between US crude and Brent assortment strategy is largely due to OPEC leader, Saudi Arabia, not to reduce its daily oil production amid the global crisis of overproduction which led to the collapse of 50% of market price international. The aim of the strategy is to oblige US producers of oil from oil shale using hydraulic fracturing and horizontal drilling, to reduce production.
OPEC States can meet current collapse in prices of crude oil, which led prices to the lowest level in the last five years, while US producers of oil shale will likely be the first to be forced to cut production. 50% decrease in oil prices last year was due to overproduction world, Emirates and Qatar estimated at 2 million barrels per day.
The oil market is a cyclical and volatile, especially due to the difficulty with which adapts to application demand. Therefore, a period with a price of 50 dollars per barrel in the medium term is followed by a 3-5 years period with a price of 150 dollars per barrel.
Coments