Friday, June 5, 2015

The war on the oil market is just beginning – The World

Le Monde | • Updated | By

The Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna Friday, June 5, confirmed its policy attached end of November 2014: maintaining its quota Official production of 30 million barrels per day, despite a global oversupply of more than two million barrels and depressed prices of the black gold in the market, fell to 62 dollars for a barrel of Brent (against 115 dollars June 2014).

Each country plays its part. US crude production, thanks to shale ( shale oil ), resists these low prices. Russia refuses to cut production and major producers post their ambitions (Iran, Iraq, Brazil …). The global battle in the oil market “only just beginning” , warns the International Energy Agency (IEA).

These are still the Saudis that will give the ” the “Friday in Vienna. “The possibility of a change in policy is little or no , warns Bhushan Bahree, expert at the US firm IHS Energy. Saudi Arabia and its Gulf allies appear determined to continue the policy decided in November. Potential dissidents realize that change is not playable while the four Gulf States who defend their market shares weigh more than half of the production of OPEC. “

In addition, he adds, we see ” no sign of the will of Saudi Arabia, Iraq and Iran to try to find common ground to share the cake, necessary but not sufficient to relaunch the production quota system “.

“Rebalancing the market”

But Riyadh has not gained the shale oil war. Many wells were closed in the US, but the production of shale oil was still little affected operating drilling platforms with better returns.

9.5 million barrels of oil (half of unconventional oils), US production has never been stronger, and it will grow to nearly 11 million in 2020 before stabilizing, according to a scenario government.

OPEC begins to take note. “Oil shale is a phenomenon that will not go away and we have to live together and find a balance” , acknowledged Abdullah Al-Badri, secretary general of the cartel. An analysis shared by the oil minister of the United Arab Emirates, Mohamed Suhail Al-Mazroui, who called on all producer countries, OPEC and non-OPEC, “share responsibility for rebalancing the market” .

historical role of swing producer

Now, the quota of 30 million barrels a day – a third of world production – set by OPEC end of 2011 is exceeded. In April and May, production exceeded 31 million barrels of oil. Saudi production has never been more important, and Riyadh suggested that the twelve members of the cartel to meet more than once a year (instead of two). A proposal interpreted as confirmation of the will of the Wahhabi monarchy to play to market forces and to end its historic role as swing producer in case of decrease (or increase) in price.

Saudi Arabia and its allies in the Persian Gulf (Kuwait, UAE and Qatar) remain deaf to the appeals of other members for relief. These countries are beginning to suffer, and even richer now demand a price “reasonable” they fall to 75-80 dollars to balance their public finances. Others, like Venezuela to the brink of insolvency, trying to get along with major non-OPEC producing countries (Russia, Mexico …) to raise prices. So far without success.



A world “décartellisé”

The world of black gold has “décartellisé”. In this great game of every man for himself, everyone produces a maximum, starting with the three countries that are a third of world production: the United States, Saudi Arabia and Russia. Iraq wants the medium term, double its production of about 4 million barrels of oil. As for Iran, he already has great ambitions while an agreement with the West end of June over its nuclear program – and thus a lifting of sanctions – is far from certain

No one. within OPEC believes in a rebound to 100-110 dollars per barrel. And its evolution in the coming months remains uncertain. Courses should stay around 60-65 dollars a few months, with demand driven by driving season in the United States, where Americans move a lot. But for Hasan Qabazard, head of OPEC’s research between 2006 and 2013, they could fall between 40 and 50 dollars in the fourth quarter due to a sharp drop in demand.

Established in 1960 in Baghdad to defend the interests of producers against the big companies countries, OPEC no longer has the old weight. In the 2000s, she decided not to set an objective or price range. In 2011, she abandoned the quota system by country, each pumping member that its infrastructure and its geopolitical situation allow it to happen. And in late 2014, Riyadh and the Gulf oil monarchies have decided not to “do” prices to their detriment, but to let the market play, even produce more than the official quota. “We can not continue to protect a certain level of prices” , noted Mr Mazroui, on the eve of the OPEC meeting.

Is death OPEC? “It still counts , shade Jamie Webster, other expert of IHS Energy. It is now in hibernation and its role has changed, but it remains a powerful force if it decides to act, even if we do not plan currently. “ He believes that the transfer of Saudi Arabia to the United States the role of swing producer is not a distinct movement and can change, geopolitical data, especially in the Middle East ., remains important for the oil market

Read also: Algeria is concerned about the fall in oil prices

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