Posted on 01/07/2015 4:38:30 AM PST by thackney
Oil market oversupply may last months or even years, but prices could recover if non-OPEC producers "act rationally", the United Arab Emirates (UAE) oil minister said in remarks published on Wednesday.
The comment by Suhail bin Mohammed al-Mazrouei in an interview with The National daily echoed recent calls by core Gulf Arab OPEC members such as Saudi Arabia that non-OPEC producers should curb planned increases in output to help prop up sagging prices.
"We are experiencing an obvious oversupply in the market that needs time to be absorbed," he was quoted as saying.
"Depending on the actual production growth from non-OPEC countries, this problem could take months or years. If they act rationally, we can see positive corrections during 2015."
(Excerpt) Read more at rigzone.com ...
Almost sounds like a threat?
Of course since ISIS is black-marketing oil to fund their religious war...keeping this particular commodity over supplied makes perfect sense for the rest of the world, no?
In some ways it is, but probably not at who you think.
Saudi Arabia, UAE, Kuwait, Qatar have had better control of their spending and building up cash reserves compared to the other members of OPEC. Saudi in particular is no longer interested in cutting their production and loosing revenue and market share, to support the over spending of the other members.
Saudi is a massive spender, hard to believe they could criticize others of too much government spending. But they also built up their cash reserves to prepare for this time. Iran, Venezuela, Nigeria are in a far bigger world of hurt than US oil producers in general.
In fact, Qatar and the UAE now realize they need to be more than just big oil producers to be prosperous. That’s why both countries are positioning themselves to be major players in trans-Eurasian world trade—in fact, the UAE has been planning for a post-petroleum age for a couple of decades, as noted by major expansions of air cargo operations at several airports in the UAE.
Both of those two have been there for a while. UAE makes more off of commerce, being the "Singapore" of the Middle East. Qatar is a major Natural Gas producer. Saudi has been building one of the largest refinery & petrochemcial complexes in the World for years in Jubail.
Think about it, an F-150 Ford Truck is approaching 30 MPG Highway, the future is consumption will continue to go down.
OPEC will die a slow death, run out of money and back to camels and sand!
Global consumption is not declining, nor is expected to decline. But it is no longer growing as fast as production has been growing.
The growth in demand is not from North America. It is from Asia: China, India and other developing countries where they are becoming middle class. They all want to own their first automobile. This is what OPEC is fighting over. They want to hurt Russia. Russia also supports their enemies in the middle east: Syria and Iran. Lastly, they want to slow down the spread of fracking/horizontal drilling to other shale plays throughout the world.
OPEC may fall apart in the next 5 years. Too many large producers are not part of OPEC now.
Also, UAE has known for years they needed to build an economy that was not based on Petroleum sales. Hence the city of Dubai. It is the Vegas of the middle east. They are the only country over there that seems to be building an economy not based on energy or military.
Qatar/Saudi Arabia wants to be the natural gas supplier to Europe. However, they need the pipeline through Syria/Turkey to get it there. That is why they were interested in the overthrow of Assad. Assad is supported by Russia/Iran. Iran also wants to supply natural gas to Europe as does Russia of course.
They want to suppress oil production in the U.S. We should subsidize domestic production if necessary because increased energy independence is a vital to our national security.
NO!!!
No more government subsidies of private industry. Not even for the ones that pays my wages.
If you want to harm private business, just ask the government to help them.
OPEC's market share is essential unchanged over the decades, 40%, except during past times where they significantly reduced production to raise prices, then it recovered back to 40%.
This isn't the first time they have had major disagreements.
Does this mean we can go back to burning REAL GAS instead of this crappy alcohol mixture?
Yes, they have always adjusted their production to keep their market share at 40% of world demand. Now, the cartel seems to be loosing its control of production levels. Too many of them need to keep pumping to support their debts/outgoing cash flow.
Nope.
EPA will use this time of low prices to force more expensive requirements upon us.
Tier 3 Vehicle Emission and Fuel Standards Program
http://www.epa.gov/otaq/tier3.htm
The Tier 3 program is part of a comprehensive approach to reducing the impacts of motor vehicles on air quality and public health. The program considers the vehicle and its fuel as an integrated system, setting new vehicle emissions standards and lowering the sulfur content of gasoline beginning in 2017.
Just like they raised the price of diesel with the ULSD program, now it is going to be required for the gasoline.
Oil and OPEC: This Time is Not as Different as You Think It Is
http://blogs.cfr.org/levi/2014/12/01/oil-and-opec-this-time-is-not-as-different-as-you-think-it-is/
It’s similarly premature to declare that sort of new era now: OPEC countries would be sticking to past behavior if they failed to cut production now but stepped in in a few weeks or months if prices fell considerably further.
I believe there are geopolitical considerations. Also, the Saudis may be trying to figure a sustainable price for oil.
Of course, who knows...I've read speculation that the Saudis decided they have a resource of declining value, and they want to produce now.
It takes only one technological breakthrough to move the demand curve.
I am guessing, only guessing, Saudi sees that sustained $100 oil drives too much new production from outside sources.
Still guessing, I think Saudi will resist making any changes to production until next scheduled OPEC meeting in June. They have the cash reserves to easily hold out far longer at half the current price.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.