The Saudis on Shale | Russell T. Rudy Energy LLC
“World Oil” reports that at a recent conference in Riyadh, Saudi Arabia’s representative to OPEC, Mohammed al-Madi, opined that the price of crude oil will not reach $100 per barrel again. He reasoned that at that price more shale oil and output from other high-cost producers would re-enter the global market.
The price of crude oil has plummeted since last November when OPEC, led by Saudi Arabia, chose to maintain market share and not reduce production. Madi explained his country’s position stating “Shale oil companies are one of the high-cost producers that benefited from high oil prices. We are not against shale oil. We welcomed shale oil, but it’s not fair for high-cost producers to push low-cost producers out of the market.”
Al-Madi went on to say “The price should be decided by the market, and the market is subject to supply and demand.” However, he later stated that “In the past 55 years, OPEC and non-OPEC producers cooperated on production cuts 19 times.”
While OPEC has thus far maintained remarkable solidarity on maintaining current output and market share, some member nations are eager to cut production and restore prices. Ali al-Omair, Kuwait’s Oil Minister, indicated that he would welcome an agreement with non-OPEC producers to cut output. Algerian Energy Minister, Youcef Yousfi is seeking to coordinate a global response from outside OPEC to restore prices.
To read the article in its entirety, please go to http://www.worldoil.com/news/2015/3/23/return-to-100-oil-seen-unlikely-by-saudis-amid-shale-surge .
