Last week, OPEC announced its decision against decreasing its oil production rate, despite the plummeting global oil prices — A clear indication that the Cartel and its chief member Saudi Arabia are betting on the lower production cost to stay relevant in an oil market increasingly dominated by production from U.S. shale. But there are at least three big problems with this strategy. First of all, North American crude isn’t as expensive to produce as it used to be. Second, there is much in the pipeline to make it even cheaper. And third, OPEC nations, including Saudi Arabia, have squandered their edge in cheap oil supplies on welfare states rulers can’t easily cut back. While OPEC’s announcement spells trouble for drillers and countries depending on oil exports, the average consumer around the world stands to benefit. The world’s biggest oil exporter, Saudi Arabia, will announce January official selling prices to buyers in Asia this week; a deeper discount for crude supplies to Asia is anticipated, which is unusual for January when oil demand for heating peaks in the Northern Hemisphere. blogs.scientificamerican/plugged-in/2014/12/02/competition-between-opec-u-s-drives-oil-prices-to-four-year-low/
Posted on: Thu, 04 Dec 2014 02:54:15 +0000
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