For the first time in five years, one can buy a metaphorical barrel of crude oil – variant on the extraction point – for below $60. 1,150 more words
Very consistent article , i loved it , article can be resumed in 4 points as it is described in oilvoice.com and chatman house editions: OPEC is caught in the a big shift in world oil markets reflecting fundamental changes: Market discipline among OPEC members. The Saudi’s grew tired of being taken advantage of by their OPEC partners who often cheat on production targets taking Saudi market share. Leaving production targets in place forces all OPEC members to face the music of lower prices. OPEC and Non-OPEC member competition. Non-OPEC crude oil production growth is coming largely from the Caspian region, Russia and the United States. Russian and Caspian crude is finding a market in China because of their locational advantages. But it is the US supply growth from the shale revolution under way that presents the biggest threat to OPEC market power. Regional energy competition between the West, Russia and China. Even though China’s economic growth is slowing its energy appetite is still huge. Lower oil prices are like winning the lottery for China. It will strike hard bargains with Russia stung by Western sanctions. China is pouring capital into Caspian infrastructure to assure its access. US shale supply growth is reducing its oil imports and only infrastructure congestion and political correctness prevent the North America from further expanding crude oil exports. These factors limit the use of energy as a political weapon by Russia and other Middle East oil suppliers changing the market dynamic in the Kingdom’s favor. Weak Global Economic Growth Increases Oil Market Competition. The economic fundamentals tell us that world oil demand growth has weakened in China, the EU, Brazil and Russia. Overall world crude production is projected to grow at an annual rate of about 1%, with OPEC production expected to grow at annual rate of 1.4% but so is its domestic demand. But OPEC faces increasing global competition from North America and fears the spread of the shale revolution worldwide.