OPEC-plus with or without US shale oil

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Fighting shale oil is not easy as envisaged

Kamel Al-Harami Independent Oil Analyst

The planned OPEC-plus meeting, which is supposed to take place on Monday, will be attended by USA shale oil representative without whose presence, such a meeting becomes void.

This is because there is no point in having meetings and discussions in the absence of the biggest oil producers.

They produce 13.5 million barrels per day, which is the main reason behind the collapse of oil prices. The collapse of oil prices by more than 60 percent to reach $20 per barrel is due to the struggle of OPEC-plus to contain the growth of USA shale oil.

However, this is not happening, which is why they have been invited to attend the OPEC-plus meeting. However, the moment they appear in Vienna via video conferencing, it becomes a real fact that they represent a power that cannot be ignored anymore.

We have to manage them and respect their power. The next challenge is figuring out how to manage a reduction of 15 or 10 million barrels. Who is going to take the biggest cuts – the first, second or third largest oil producers? The asking volume is high, which means asking for reduction of 4-5 million barrels by each of the three top producers.

Is Saudi Arabia is willing to take up the biggest volume and retain its swing role again? Then what is the price level that OPEC-plus is seeking and asking for? Is it to be between $45 and $50 per barrel to satisfy shale oil and Russian producers, all of who can claim that Saudi oil cost is even below $7 per barrel? Or will they be asking for an equilibrium price which today is far above $80 a barrel? That will kill the world economy, especially with a level of $50 not meeting OPEC’s satisfaction.

Let’s hope OPEC-plus meets with USA shale producers in the coming week; otherwise, the USA administration will just block imports of foreign oils with various tariffs and regulations. It can even activate antitrust laws and include dumping of oil to infl uence the oil prices. Therefore, fighting shale oil is not easy as we envisaged.

By Kamel Al-Harami Independent Oil Analyst
email: naftikuwaiti@yahoo. com

This news has been read 9897 times!

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