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Crude Economics
OPEC Sees US Shale In Trouble
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  • Andrew Allison

    Apologies for the repetition, but it’s far from clear that the Saudi’s claim that the target is US shale produces is anything more than effort to disguise the real target(s). It’s inconceivable that the Saudi’s don’t know what US shale production costs are and where they’re headed. Furthermore, the so-called “collapse” of the oil rig market (20% since mid-2014) has not resulted in any decline in production which, thanks in part to increased per-rig productivity, is forecast to continue increasing. The price can’t increase as long as there’s a surplus, and any increase due to increased demand or reduced supply will be moderated by increased domestic production and the substitution of natural gas.

    • Kevin

      It’s a multiple birds with one stone thing for them. They undermine their political enemies such as Iran, they deprive their competitors such as US shale producers of revenue and investment, the undercut the attractiveness (and financial viability) of research and investment into alternative energy and they help perk up global economic growth which will in turn stoke demand for their oil -especially in contrast to what would have happened if they had to bear the lion’s share of production cuts to offset drops in demand and increases in nonOpec production. One other consideration is that an oil glut makes it much cheaper for Western powers to take. I litany action against Iran if they ever choose to do so as the loss of Iranian exports would be much less significant – with world oil inventories bursting at the seams the industrialized nations are well positioned to absorb such a shock.

      • Andrew Allison

        I agree. It’s the tedious repetition of the self-evident nonsense that the target is the US shale industry to which I object.

  • Jacksonian_Libertarian

    I’ve been saying this all along, the state owned oil monopolies of OPEC will never be able to compete with the American shale oil developers who are exposed to the “Feedback of Competition”.

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