Column: Geopolitical events demand rapid response from unconventional producers by oil and gas expert Dr. Daniel Fine -Special to the Daily Times- the complete article by Dr. Fine use this link

The Saudi-OPEC price war is now nine months old. Two OPEC meetings have passed without revisions or changes in strategy. It is a war against high-cost unconventional American producers that are seen as the principal threat to market share.

The West Texas Intermediate price per barrel has recovered since the low of the mid-$40 bottom to slightly above $60. This has become a trading range with algorithms following momentum making a price range. Financial or paper traders and speculators have moved the price of oil in a “rally” up $15.

Oversupply still overshadows the market. The balance of supply and demand awaits the onset of winter or 2016. The market share for OPEC and Saudi Arabia continues to expand at the expense of non-OPEC producers, but American shale or unconventional production has not declined to the point that an acceptable world balance between supply and demand appears to be in the making.

Daniel Fine
Daniel Fine (Daily Times file photo)

The CEO of Conoco Phillips was invited to the recent preliminary OPEC meeting and he challenged the producer countries with a warning: American “high cost” production will survive the price war with cost-saving efficiency already in process and yet to come. This promises American oil supply at less cost and a prospect of little change in world supply while demand remains weak and possibly weaker with China importing less crude as well as iron ore and other commodities.

What is now at play in oil price formation is geopolitics.

Tags: Blogs, DanielFine, Dr.DanielFine, EU, Geopolitics, NewMexico, NewMexicoCenterforEnergyPolicy, News, OPEC, OilIndustry, More…OilandGas, Politics, SaudiArabia, SaudiAramco, Shale, USCongress, WorldNews

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Hey Skip,

This is what I've said from the beginning!!!!!!! These guys are way above your's and my pay grade. They seem to think something that you won't admit.The Shale and unconventional production have OPEC scrambling and hoping that they can kill the unconventional  producers with a price war.

Haven't changed my mind, Joe.  The issue provides room for those who need to produce content or, as in this case, blow their own horn, to claim that:  the Saudis and Americans are out to damage the Russian economy by crippling their only source of hard capital export dollars;  the Saudis and the UAE are punishing Iran and limiting their ability to spread their brand of Shia Islam; the Saudis are defending their market share especially that in China and SE Asia from all comers (but not the US as we don't export); etc., etc. etc.  What you seem to miss is that some or all of the above may be true, only the Saudis know for sure.  And that by defending their market share at all costs, which is the analysis accepted by the majority of experts I have read, they provide the opportunity for any and all competitors to cry poor me.  Including US energy companies that depend on high cost unconventional production.  For some it represents the opportunity to overturn the ban on exporting domestic crude.  None of those proponents have yet to put forth an argument that holds water.  However I'm sure they feel it helpful to their cause to promote the feeling that they are being targeted by the Saudis.



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