L
LequteMan
Guest
Recently, Saudi Arabia's oil minister predicted a bleak future for Nigeria- he says Saudi won't budge if oil prices fall to $20/barrel or not, it would not cut down on it's oil production- which is believed would stop the fall in oil prices.
"Whether it goes down to $20, $40, $50, $60, it is irrelevant," he said, adding that the world "may not" see oil back at $100 a barrel, formerly Saudi Arabia's preferred level for prices, again.
However, a report from The Cable explains why the condition might persist and what to expect in the near future:
Low oil prices will last long enough for one of two events to happen. The first possibility, the one most traders and analysts seem to expect, is that Saudi Arabia will re-establish OPEC’s monopoly power once it achieves the true geopolitical or economic objectives that spurred it to trigger the slump.
The second possibility, one I wrote about two weeks ago, is that the global oil market will move toward normal competitive conditions in which prices are set by the marginal production costs, rather than Saudi or OPEC monopoly power.
This may seem like a far-fetched scenario, but it is more or less how the oil market worked for two decades from 1986 to 2004. Whichever outcome finally puts a floor under prices, we can be confident that the process will take a long time to unfold.
click here to read more
#Nigeria #SaudiArabia #OPEC
"Whether it goes down to $20, $40, $50, $60, it is irrelevant," he said, adding that the world "may not" see oil back at $100 a barrel, formerly Saudi Arabia's preferred level for prices, again.
However, a report from The Cable explains why the condition might persist and what to expect in the near future:
Low oil prices will last long enough for one of two events to happen. The first possibility, the one most traders and analysts seem to expect, is that Saudi Arabia will re-establish OPEC’s monopoly power once it achieves the true geopolitical or economic objectives that spurred it to trigger the slump.
The second possibility, one I wrote about two weeks ago, is that the global oil market will move toward normal competitive conditions in which prices are set by the marginal production costs, rather than Saudi or OPEC monopoly power.
This may seem like a far-fetched scenario, but it is more or less how the oil market worked for two decades from 1986 to 2004. Whichever outcome finally puts a floor under prices, we can be confident that the process will take a long time to unfold.
click here to read more
#Nigeria #SaudiArabia #OPEC