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Page added on August 12, 2015
Oil wars: OPEC is winning
OPEC’s strategy to pump like crazy despite collapsing oil prices seems to be finally paying off: The U.S. oil industry is showing cracks.
Oil supply from non-OPEC countries is set to slow dramatically next year and slip into its first contraction since 2008, the International Energy Agency said Wednesday in its monthly oil market report.
And the IEA said the U.S. will be the hardest hit, as more oil producers rethink their priorities and cut production.
“While some producers might be successful in lifting output in the short-run, we expect the majority will struggle to sustain higher rates over longer periods due to steep spending curbs,” the report said. The IEA monitors energy market trends for the world’s richest nations.
The U.S. drilling activity is already down steeply from the October 2014 peak; 59% fewer rigs were operating at the end of July. Oil hit a six-year low of $43.08 a barrel on Tuesday, dimming hopes for a significant uptick in activity any time soon.
OPEC, the 12 nation cartel led by Saudi Arabia, has embarked on a fierce battle over its market share last November. It refused to cut output in the light of lower prices, hoping instead to squeeze its rivals with higher production costs out of the market.
Resilience from the U.S., Russia, and other non-OPEC countries has led to the biggest oil glut in 17 years.
But something had to give. The IEA said oil’s second lurch below $50 per barrel has prompted more oil companies to take an ax to production.
Non-OPEC output is forecast to add 1.1 million barrels a day to average 58.1 million barrels a day in 2015, and contract by 200,000 barrels a day in 2016. That compares with record growth of 2.4 million barrels a day in 2014.
Meanwhile, OPEC output might increase further in 2016. Its member Iran is eager to take advantage of the proposed nuclear deal and regain its status as a global energy power.
6 Comments on "Oil wars: OPEC is winning"
apneaman on Wed, 12th Aug 2015 6:01 pm
Them “rag heads” done wronged Merica again.
Nony on Wed, 12th Aug 2015 8:32 pm
Keep slaughtering us, Saudis. I’d like my gasoline for ninety-five cents instead of two dollars.
BobInget on Wed, 12th Aug 2015 10:02 pm
I don’t care how many PR petro-dollars get spent issuing garbage like above nonsense.
Saudi Arabia broke OPEC cartel rules.
1) Share excess profits among cartel members,
2) Militarize product, use punitive pricing measures against companion cartel members.
3) Deny fellow members profits.
If OPEC were a drugs cartel most of the blood in the streets would be Saudi. OPEC is a dead letter.
Wikipedia:
In economics, a cartel is an agreement between competing firms to control prices or exclude entry of a new competitor in a market. It is a formal organization of sellers or buyers that agree to fix selling prices, purchase prices, or reduce production using a variety of tactics.[1] Cartels usually arise in an oligopolistic industry, where the number of sellers is small or sales are highly concentrated and the products being traded are usually commodities. Cartel members may agree on such matters as setting minimum or target prices (price fixing), reducing total industry output, fixing market shares, allocating customers, allocating territories, bid rigging, establishment of common sales agencies, altering the conditions of sale, or combination of these. The aim of such collusion (also called the cartel agreement) is to increase individual members’ profits by reducing competition. If the cartelists do not agree on market shares, they must have a plan to share the extra monopoly profits generated by the cartel.
apneaman on Thu, 13th Aug 2015 3:31 am
US Attack On Syria Violates International Law
https://www.youtube.com/watch?t=23&v=XSQ_0PesS8A
rockman on Thu, 13th Aug 2015 6:46 am
Rather odd definition of “winning”: OPEC is producing more oil then a year ago and is receiving almost $500 BILLION less per year. I wonder what their definition of losing might be. LOL.
penury on Thu, 13th Aug 2015 11:13 am
In the effort to dispose of all fossil fuels under your nations control as fast and as cheaply as possible, who are the real winners? The nation who becomes an energy importer first? The consumer who enjoys a short period of low prices, followed by a long period of energy shortages? The people whom invested all of their money in energy stocks? Or the morons who do not have a clue and keep their hydro-carbons in the ground because of low prices? Its a quandry.