The United Arab Emirates said on Tuesday that OPEC will no longer move to shore up crude prices, arguing that rising North American shale oil output needed to be curbed.
World prices have been falling since June but the pace of the slide accelerated in November when the Organisation of the Petroleum Exporting Countries (OPEC) decided to maintain its production unchanged at 30 million barrels per day.
Analysts say that richer cartel members like the UAE have been ready to accept the price fall in the hope that it will force higher-cost shale producers out of the market.
“We cannot continue to be protecting a certain price,” UAE Energy Minister Suhail al-Mazrouei said.
“We have seen the oversupply, coming primarily from shale oil, and that needed to be corrected,” he told participants in the Gulf Intelligence UAE Energy Forum in Abu Dhabi.
Oil prices continued their slide towards six-year lows in Asian trade on Tuesday after Brent crude closed below $50 a barrel the previous day for the first time since April 2009.
The fall came after Wall Street investment titan Goldman Sachs slashed its price outlook, adding to anxiety about global oversupply, weak demand and soft growth in the key Chinese and European markets.
Brent crude for February delivery fell $1.33 to $46.10 a barrel — around its lowest point since April 2009.
US benchmark West Texas Intermediate shed $1.13 cents to $44.94 — its weakest level since March 2009.
Mazrouei said the UAE remains “concerned” about balance in the oil markets but “cannot under any circumstances be the only party responsible,” in reference to rising output from non-OPEC members.

- ‘Not sustainable’ -

Oil producers outside the cartel should be rational about their output, he said, adding that current prices are “not sustainable” for them.
“We are telling the market and other producers to be rational, to be like OPEC and look at growth in the market,” Mazrouei said.
He said that if OPEC had opted to cut production, other producers would have stepped in to make up the lost output and the cartel would have lost market share without any effect on prices.
Mazrouei said current prices were “not sustainable,” particularly for producers outside the Gulf region.
He said that with oil below $50 a barrel, it was uneconomic for shale oil producers to keep investing in increasing production.
“Shale oil brings almost four million (barrels per day) for the United States, and the hope is that it will bring another four million by 2020. That cannot be sustained, produced or invested in at the current oil price,” he said.
Mazrouei said he did not expect a swift recovery in prices.
“It is unlikely that we’ll see a sudden rise.”
He said the drop in oil revenues would not stop the UAE from investing in its production capacity.
“We aspire to keep our role as a reliable supplier and keep investing,” he said.
“We cannot as a responsible oil producer and a reliable supplier in the market just stop our plans every time there is volatility in the market, that is not wise and that’s not the plan.”

- See more at: http://www.vanguardngr.com/2015/01/uae-says-opec-will-no-longer-shore-oil-price/#sthash.ipP4MXye.dpuf

Good morning Niger deltans, i hope you can smell the coffee now that you have lost your lands and rivers and the oil price has crashed

But how will other nations market their crude and make profit , its like UAE wants to monopolize oil market or am I not getting this writeup ?

Shale oil , should be banned ?

Countries should stop producing oils ?

I don't get it

kettykin:
Good morning Niger deltans, i hope you can smell the coffee now that you have lost your lands and rivers and the oil price has crashed

Are you really this deluded.

kettykin:
Good morning Niger deltans, i hope you can smell the coffee now that you have lost your lands and rivers and the oil price has crashed

Yes o! GEJ has enriched their militants. Asari is using their money to develop Benin Republic, the other militants are buying luxury properties and automobiles. Dem neva chi chumthing.......!!

Code213:


Yes o! GEJ has enriched their militants. Asari is using their money to develop Benin Republic, the other militants are buying luxury properties and automobiles. Dem neva chi chumthing.......!!

Tinubu, Otedola, Dangote and Danjuma will be more affected, before any ant in the Nigerdelta feels the price drop. Oil at $5 per barrel is a problem for rest of Nigeria not the average Nigerdeltan. Quite frankly a huge relief for the people.

Watch as your state govs, cry themselves to death in the next 12 months.

Shale oil producers should be forced to close shop with cheaper price and maintaing current production quantity

atlwireles:


Are you really this deluded.

yes i am , but more deluded are the folks who had all it takes to change their destiny in this once in a life time opportunity but what they did with that Opportunity will be the discourse of the next generation of historians.
My special Sympathy goes to Rivers state in particular and Ikwerre Ethnic group, i hope they will not be in a hurry to chnage them names of their towns and villages by removing the R- prefix

kettykin:

yes i am , but more deluded are the folks who had all it takes to change their destiny in this once in a life time opportunity but what did they do with that Opportunity will be the discourse of the next generation of historians.
My special Sympathy goes to Rivers state in particular and Ikwerre Ethnic group, i hope they will not be in a hurry to chnage them names of their towns and villages by removing the R- prefix

Too childish for me this afternoon. Go cry to somebody else.

atlwireles:


Tinubu, Otedola, Dangote and Danjuma will be more affected, before any ant in the Nigerdelta feels the price drop. Oil at $5 per barrel is a problem for rest of Nigeria not the average Nigerdeltan. Quite frankly a huge relief for the people.

Watch as your state govs, cry themselves to death in the next 12 months.

Funny guy! Am from the NigerDelta!!! I have no biznex with whoever oil biznex goes underground. They all can see it coming, so like Nigeria, they should also diversify their income source!

Code213:


Funny guy! Am from the NigerDelta!!! I have no biznex with whoever oil biznex goes underground. They all can see it coming, so like Nigeria, they should also diversify their income source!

hahahaha, then you should be happy for us. We are hoping oil sells for $1.00. Let's see your income diversity miracle work itself out.

The Saudis are always ready to sacrifice oil retail price to suit America's economic agenda and sabotage.

They did this in the 70's to cripple a secular democratic govt in Iran. The economic hardship led to Arab Spring like dictatorship which ushered in Ayatollah regime.

Today, with Russia, Brazil, Venezuela and Nigeria the US is bent on instigating economic hardship and social turmoil in order to uproot the govts in these countries.

I wish it can be reduced to $1p/b so that all this noise in 9ja's political terrain will die a natural death ..

atlwireles:


hahahaha, then you should be happy for us. We are hoping oil sells for $1.00. Let's see your income diversity miracle work itself out.

empires have been built on desert!!! A little bit of innovation here, and a little bit of belt-tightening there, and we will get it right. Be optimistic brother..

RevDesmondJuju:
The Saudis are always ready to sacrifice oil retail price to suit America's economic agenda and sabotage.

They did this in the 70's to cripple a secular democratic govt in Iran. The economic hardship led to Arab Spring like dictatorship which ushered in Ayatollah regime.

Today, with Russia, Brazil, Venezuela and Nigeria the US is bent on instigating economic hardship and social turmoil in order to uproot the govts in these countries.

The Conspiracy theorists have arrived. Smh!!! Google Shale Oil and understand what is going on here!!

Code213:


The Conspiracy theorists have arrived. Smh!!! Google Shale Oil and understand what is going on here!!

It won't hurt if you did a little research.

Plebs now use conspiracy as an excuse to hide their ignorance

Code213:

empires have been built on desert!!! A little bit of innovation here, and a little bit of belt-tightening there, and we will get it right. Be optimistic brother..

Pray crude oil falls to a dollar a barrel. So, our environment and its people can heal themselves. Nigeria can build whatever empires she wants.

Code213:


The Conspiracy theorists have arrived. Smh!!! Google Shale Oil and understand what is going on here!!

On January 2, 1977, the Shah of Iran made a painful admission about his country’s economy. “We’re broke,” he confided bluntly to his closest aide, court minister Asadollah Alam, in a private meeting. Alam predicted still more dangers to come: “We have squandered every cent we had only to find ourselves checkmated by a single move from Saudi Arabia,” he later wrote in a letter to the shah. “[W]e are now in dire financial peril and must tighten our belts if we are to survive.”

The two men were reacting to recent turmoil in the oil markets. A few weeks prior, at an OPEC meeting in Doha, the Saudis had announced they would resist an Iran-led majority vote to increase petroleum prices by 15 percent. (The shah needed the boost to pay for billions in new spending commitments.) King Khalid bin Abdulaziz Al Saud argued that a price hike wasn’t justified when Western economies were still mired in a recession — but he was also eager to place economic constraints on Iran at a time when the shah was ordering nuclear power plants and projecting influence throughout the Middle East. So the Saudis “flooded the markets,” ramping up oil production from 8 million to 11.8 million barrels per day and slashing crude prices. Unable to compete, Iran was quickly driven from the market: The country’s oil production plunged 38 percent in a month. Billions of dollars in anticipated oil revenues vanished, and Iran was forced to abandon its five-year budget estimates.

A damaging ripple effect persisted: Over the summer of 1977, industrial manufacturing in Iran fell by 50 percent. Inflation ran between 30 and 40 percent. The government made deep cuts to domestic spending to balance the books, but austerity only made matters worse when thousands of young, unskilled men lost their jobs. Before long, economic distress had eroded middle-class support for the shah’s monarchy — which collapsed two years later in the Iranian Revolution.

Today, oil prices have again plummeted, from a high of $115 per barrel in August 2013 to under $60 per barrel in mid December 2014. Western experts, predictably, have seized the opportunity to ponder what cheaper oil might mean for the stock market. As for why prices have dropped, some analysts have suggested it has little to do with any manipulation of Saudi spigots: A December essay in Bloomberg Businessweek credited the American shale revolution with “breaking OPEC’s neck.”

There’s no doubt that shale has eroded Saudi Arabia’s “swing power” as the world’s largest oil producer. But thanks to their pumping capacity, reserves, and stockpiles, the Saudis are still more than capable of crashing the oil markets — and willing to do so. In September 2014, they did just that, boosting oil production by half a percent (to 9.6 million barrels per day) in markets already brimming with cheap crude and, a few days later, offering increased discounts to major Asian customers; global prices quickly fell nearly 30 percent. As in 1977, the Saudis instigated this flood for political reasons: Whether foreign analysts believe it or not, oil markets remain important venues in the Saudi-Iranian struggle for supremacy over the Persian Gulf.

This isn’t the first time since the late 1970s that Saudi Arabia has used oil as a political weapon against its rival. In November 2006, Nawaf Obaid, a Saudi security consultant connected to Prince Turki al-Faisal, then Saudi Arabia’s ambassador to Washington, wrote an op-ed in the Washington Post noting that if “[i]f Saudi Arabia boosted production and cut the price of oil in half … it would be devastating to Iran … [and] limit Tehran’s ability to continue funneling hundreds of millions each year to Shiite militias in Iraq and elsewhere.” Two years later, at the height of the global financial crisis, the Saudis acted: They flooded the market, and within six months, oil prices had fallen from their record high of $147 per barrel to just $33. Thus, Iranian President Mahmoud Ahmadinejad began 2009, an election year, struggling with the sudden collapse in government oil revenues and forced to slash popular subsidies and social programs. The election’s contested outcome was accompanied by economic contraction and the worst political violence in Iran since the fall of the shah.

Signals of a new flood emerged as early as June 2011. While addressing an audience of senior American and British officials at a NATO operations base, Prince Turki warned Iran not to take advantage of the regional unrest triggered by the Arab Spring. Paraphrasing some of Turki’s comments, the Guardian noted that Iran’s economy could be squeezed hard by “undermining its profits from oil, something the Saudis … were ideally positioned to do.”

The Saudis understood, too, that the best time to crash the markets would be when prices were already soft and consumer demand low. In early December, just a few months after Saudi Arabia unleashed its latest oil flood, Obaid wrote in a Reuters article that his government’s decision to depress prices is “going to have a huge effect on the political situation in the Middle East. Iran will come under unprecedented economic and financial pressure as it tries to sustain an economy already battered by international sanctions.” Around the same time, the Saudis were no doubt pleased to see bread prices shoot up by 30 percent in Tehran. (Bread is a staple of the Iranian diet, and its prices are a bellwether for the economy.)

On Dec. 10, the Saudi oil minister said his country would keep pumping 9.7 million barrels per day into the global markets, regardless of demand. For their part, the Iranians have shown alarm, if not yet panic. Without naming names — he didn’t have to — President Hassan Rouhani decried the “treacherous” actions of a major oil producer whose “politically motivated” behavior was evidence of “a conspiracy against the interests of the region…. Iran and the people of the region will not forget such conspiracies.” The previous day, Vice President Eshag Jahangiri had described the rapid plunge in oil prices as a “political plot … not a result of supply and demand.”

Riyadh’s real hope, if history is any indicator, is that escalated production will force Rouhani’s government to implement an austerity budget that will ultimately stoke underlying social unrest and once again push people into the streets. If this happens, it might not lead to an event as significant as the shah losing his grip on power — but it would reinforce the Saudis’ faith in oil as a potent weapon in the battle to dominate the Middle East. And oil floods, in turn, would likely continue their periodic, dangerous rattling of both the markets and the region.

http://foreignpolicy.com/2014/12/18/why-would-the-saudis-crash-oil-markets-iran/

O

Code213:


The Conspiracy theorists have arrived. Smh!!! Google Shale Oil and understand what is going on here!!

Pleb why act like you did not see my post?

Ignoramus