At the end of this week, the OPEC is going to hold another summit in Austria. The summit is designed to discuss the cartel’s further moves, Market Leader reports. At he same time, the experts of Masterforex-V Academy assume that the summit is an urgent one since the OPEC seems to be losing control over the global market of crude oil.
In November 2014, the OPEC decided to leave the daily oil production unchanged despite the rapidly declining oil prices. This was a big surprise of the entire world. On June 5th, the world may be surprised once again.
At the time, everyone was expecting a change in the OPEC policies. Still, Saudi Arabia had learned a couple of lessons in the 1980s, when it decreased the oil productions hoping to see the prices recovering. However, Saudi Arabia only lost a bit of its market share without seeing any higher prices.
So, the latest policies have been an attempt to preserve the existing market share and maybe even to win some more of it. Moreover, in April 2015, Saudi Arabia increased its daily oil production by 700K barrels up to 10,3 million barrels a day. They hope to oust other market players who produce more expensive oil.
More experts start giving us the possible outcomes of the forthcoming OPEC summit. Some experts say that the OPEc is not going to make any changes to the existing oil production despite the urgent calls by Venezuela , Iran and Nigeria. Saudi Arabia, which is the OPEC leader, has made a decision to fight for the market by all means.
At the same time, the American shale oil producers are fighting back longer than expected. Indeed, the OPEC has seriously undermined the U.S. shale oil industry. However, this is not a devastating assault. The OPEC’s strategy is working though less effectively than expected. Still, it has a lot of time to become more efficient. Probably, that’s the major reason why they say the OPEC is not going to cut down on its oil production during the summit.
Still, others say that other OPEc members are no longer motivated by low oil prices resulting from the existing OPEC production. The pressure on Saudi Arabia may intensify when backed by other OPEC members apart from Venezuela , Iran and Nigeria. At the same time, the budgets of OPEc members are running low since they are heavily dependent on oil export. This is the key reason to consider the possibility of an oil production cut. At some point in the future the OPEC will be unable to compete with the U.S. giants with much a bigger financial cushion while the domestic pressure is going to increase.
At this point, it is hard to make a certain prediction regarding the forthcoming summit. Anyway, this is going to be another major event in the oil industry, which will definitely influence future oil prices.
