Petroleum Africa
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Friday, January 9, 2015
While prices continue to fall, OPEC continues to sit on its hands with Saudi Arabia and other Gulf producers showing no sign of cutting output to bolster oil prices, despite calls from other member countries to do just that. Saudi Arabia’s Oil Minister Ali al-Naimi said the group needed to defend market share against US shale oil and other competing sources.
Saudi may be using production as a tool against the US’ shale production, which has a much higher cost to extract, but other member countries do not have the financial cushion that Saudi does and the slide in oil prices is severely hurting their economies. OPEC is not willing to wholly take the blame for the current crisis and says that besides the US, producers such as Russia, Mexico, and Kazakhstan are all to blame for the oversupply in the market.
It is pretty clear that OPEC is not a democratic organization despite the voting in of secretary generals and presidents – Saudi, and its production, rule the roost at the organization. African members, as well as Iran and Venezuela, have all wanted a reduction in output, with both Iran and Algeria calling on OPEC publicly to reduce flows and even Libya has entered the fray, but Saudi and its Gulf minions are so far holding firm on production rates.
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