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OPEC’s long-term problems… The Economist

You are here: Home / Commodity Research / OPEC’s long-term problems… The Economist

July 9, 2019 by Jim Colburn Leave a Comment

Here is The Economist on looking past the recent OPEC+ deal:

”But opec’s decision to trim output points to further uncertainties within the alliance. The first is how long it will be willing to continue losing market share to America. In 2014, as American oil flowed freely, opec declined to curb output, hoping that slumping prices would teach gung-ho American oilmen a lesson. The ensuing crash pained petrostates and wildcatters alike. But shale production has roared back—last year America produced more crude than any other country—and opec has become reluctant to let prices dive again. The result is that opec’s share of global production has dipped, from 42.2% in 2016 to 39.2% in March, and America’s has risen, from 10.9% to 14.5% (see chart)….

But there is a limit to how much further output in Venezuela and Iran can fall. If oil prices remain low, Saudi Arabia and Russia may face an uncomfortable choice: let prices dip or cut production more steeply, thereby losing market share and propping up American shale. This month’s meeting was straightforward. Future ones may be less so.”

 

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Commodity Research Group (CRG), founded by veteran analyst Edward Meir, is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct commodity hedging strategies.

Our associates bring decades of experience to the table, as they seek to help our clients understand the markets. CRG will distill the myriad of pricing variables mentioned above into coherent research that is to-the-point and tailored to a clients hedging or pricing needs. In addition, CRG is available for consulting assignments and speaking engagements. CRG does not manage money or trade for itself.

 


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