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Hail Shale
OPEC Sees Market Share Sliding in 2015
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  • Curious Mayhem

    Saudi Arabia’s main targets are Iran and Russia, as in the 1980s. The US frackers are a minor part of the puzzle. Global demand growth is slowing as well.

    OPEC is dead. We’re seeing the emergence of regional blocs and a power-struggle for the Persian Gulf.

  • Jacksonian_Libertarian

    The problem with these projections is they don’t account for the creativity and cost cutting of the Oil producers most exposed to the free market, namely the US Shale Oil producers. The cost of developing shale oil in the US has been dropping in a perfect straight line slope for 4 years, so until this stops the costs in the US are falling. Contrasting this with the rising maintenance costs and declining production of the old wells in the state owned oil monopolies of OPEC and elsewhere indicates that the situation is much worse for OPEC than even this most recent forecast is projecting. As a final nail in the coffin of the OPEC strategy we have the higher transportation costs of OPEC oil which has to be shipped to the consumer, while US shale oil producers have a captive US market which is supplied entirely by low cost pipelines.

  • Kevin

    If OPEC production dropping 1 million barrels per day is projected to lead to $50/barrel oil, how much would they have had to cut in order to keep prices at $100? 2 million? 3 million? 4? Since this cutting for all practical purposes would be done by the Saudis, Kuwaitis and Emeratis while the others cheated (and US shale and Canadian tar sands cranked up output even further at $100/barrel), it’s sey to see why the Saudis thought this was not a good plan. Better to cut prices, crush their higher cost competitors (oil or renewables) and wait for demand to pick up in the face of cheap oil; that it bankrupts their enemies is just gravy on top.

  • Andrew Allison

    Reuters confuses production cost with the export price needed to balance a country’s budget. TAI has published charts of the latter, but also makes the mistake of including US production cost rather than the, negligible, contribution of US oil and gas exports on government revenue. Simply put, there’s an enormous difference between the financial pain felt by producing countries and producers.

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