posted at 22:50
Author Name: Ian Timberlake
Saudi sights set on US shale at crucial OPEC meeting
Analysts say the kingdom is content to see shale oil producers - and even some members of the cartel - suffer from low prices and will resist pressure to reduce output and shore up the cost of oil. "Saudi Arabia wants to try and knock out shale oil competitors from the market," said Saudi economist Abdulwahab Abu-Dahesh. Oil prices have collapsed to four-year lows on factors including dampening demand in a sluggish world economy, a sharp rise in output from shale oil and other unconventional sources, and a strong dollar. Global oil prices fell Monday amid skepticism that OPEC would move aggressively to lift prices. Analysts saw the Saudi move as an effort to hold onto North American market share against cheaper oil from US shale fields. "I think the only beneficiaries of an oil cut would be the shale oil producers who are now losing money as the prices are becoming lower than their marginal cost," Alturki said. Technological innovations have unlocked shale resources in North America and raised daily US oil output by more than 40 percent since 2006, but at a production cost which can be three or four times that of extracting Middle Eastern oil. "Over the longer-term, Saudi Arabia may see a period of lower oil prices as working in its favour," boosting oil demand, they said.

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