Some representatives of Kuwait’s oil industry see no fundamentals for much higher oil prices above $50/b in the near future. At the same time, they rate OPEC’s strategy aimed at preserving the cartel’s market share as successful. The Kuwait Minister of Oil says that until the end of this year, the global market of crude oil may have got its balance restored to see the prices settle around $50/b, Masterforex-V Academy reports.
The minister underlines that OPEC’s strategy to guard its market share has been successful and the cartel is not going to see it shrink due to production cuts in Canada, Libya and Nigeria. At the same time, the U.S. shale oil producers are also expected to cut their oil production, to ease the competition in the international market a little bit. At the same time, those production cuts are definitely going to contribute to the balance recovery in the global market of crude oil in the coming months.
For those of you who don’t know, Qatar hosted an emergency oil summit in Doha last month. Even though the summit gathered some of the world’s major oil producers and exporters, other refused to participate, which definitely contributed to the poor result of this summit. To be more specific, the participants failed to agree on freezing their oil production quotas to prevent oil prices from going further down. The thing is that Iran, a major oil exporter who recently came back to the international market, refused to join the summit. At the last minute, the Saudis changed their mind and disrupted the summit by saying that they would back the agreement only if Iran did the same.
Another oil summit is planned for June 2nd, 2016. Still, since the oil prices advanced a little bit, the very question of production cuts becomes secondary, which means that the likelihood of such cuts is going down. On top of that, the participants may even avoid putting this issue on the agenda at all.
For production quotas to be capped, each and every oil market player has to be willing to cooperate and cut the production, the minister says. That said, Kuwait is willing to support Saudi Arabia’ policy. At the same time, Kuwait is planning to gradually increase its oil production from 3 million barrels today all the way up to 4 million barrels in 2020. At the same time, they are planning to invest some $60 billion in the development of new oil fields and backing the production.
