The Guardian reported that the quest
by the Organisation of Petroleum Exporting Countries to surmount the threat of
shale oil may be far from reality going by the recent developments in the
global oil market.
Indeed, the price crash scenario and the
steady output strategy may have negative impact on the development of the new
energy source but indications emerged that some promoters of shale oil have
adopted a win-it -all technique for survival.
Oil price is currently around USD 65.37 per
barrel, about 45% below peak prices from last June.
Historically, when oil prices fall, OPEC
nations cut back production, to help support prices, but they havenít done that
this time, with aggressive levels of production largely viewed as an effort to
force some US drillers out of the market and make sure OPEC retains its global
market share.
Countries, such as Nigeria, Algeria and Iran
among others have clamoured for OPEC’s intervention through output cut, but
other members felt relatively comfortable with their market strategy.
Meanwhile, the cartel is already divided ahead of its next meeting slated for
June 5th 2015.
Mr Bijan Zanganeh, Iran’s oil minister, had
said that OPEC’s strategy of holding output steady is not working, urging the
group to discuss production levels before its next meeting in June.
However, OPEC in its latest monthly report
said the demand for its oil will rise during 2015 because the cartel is winning
its price war against US shale producers by driving them out of business.
Higher global refinery runs, driven by
increased seasonal demand, along with the improvement in refinery margins, are
likely to increase demand for crude oil over the coming months.
OPEC forecasts demand at an average of 29.27
million barrels per day in the first quarter 2015, a rise of 80,000 bpd from
its previous prediction made in its March report. At the same time, it said,
the cartelís total output will increase by only 680,000 barrels per day, less
than the previous expectation of 850,000 barrels per day, due to lower US and
other non-OPEC production.
Steelguru.com