for Saudi Arabia
Ed Hirs, an energy economist from the University of Houston, talks to The Fuse about the dangers of oil supply disruptions and OPEC's impact on shale.
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OPEC’s gamble to cut production to shore up prices has not worked out the way members thought it would, but the cartel cannot be faulted for not trying. The inadequacy of its policy in the first part of 2017 means that OPEC will do whatever it takes during the second half of the year to achieve its goals.
If the GCC crisis lasts for months or even years, the appeal of more extreme measures could grow over time.
Are Recent U.S. Crude Draws the Result of a Normal Seasonal Decline or a Delayed Effect of OPEC’s cut?
Crude stock draws are not out of the ordinary for this time of the year, but it appears that some OPEC members restricting supply has begun to bite the U.S. market.
The possibility that Russia may soon own refineries in the U.S. if Venezuela’s PDVSA defaults on its loans from Rosneft has pushed the risks of foreign-owned energy assets in the U.S. into the spotlight. As of now, some 30 percent of U.S. refining capacity is owned by foreign companies.
It’s groundhog year for the OPEC cartel, which has been unable to structurally shift fundamentals and prices in its favor since the price collapse in mid-2014, and it is reliving its catch-22 scenario with competing producers.
While oil and gas supplies have yet to be significantly affected by the current spat surrounding Qatar, it could escalate tensions in the region, home to a majority of the world’s oil reserves, and lead to deeper geopolitical instability.
In the aftermath of the 2014 price fall, producer countries have had to reevaluate policy and economic strategy while contending with a persistent glut that may dampen prices for some time, further undermine their budgets, and possibly cause domestic strife.
As the group doubles down on its production cut, questions linger about exit strategy, capability, and size.