The price of Brent oil has risen sharply this week. Friday afternoon cost a barrel over $ 57. Despite the price was around ten US dollars lower a week ago, the oil price is still not sustainable in the long term, says oil analyst Thina Saltvedt at Nordea Markets. Before the summer, prices around 110 dollars a barrel.
– Venezuela and Iran are struggling now very with oil prices, says Saltvedt. Also Norwegian oil industry hit hard.
Currently, there is only one country that still keeps his head above water:
– It is Saudi Arabia is in power here. They have control and is the de facto leader, said oil analyst.
World’s
The reason for this, is the country’s superior production of oil – combined with low production costs.
When the country and a member of the OPEC cartel, which itself regulates both price and production, there are few other players who can stand in the way of Saudi Arabia.
– Saudi Arabia says that they can continue to produce at these prices. There is not anyone else who can. Eventually they managed to squeeze out the most expensive producers, it is in a way what they are doing now.
– If they do not want change, do not get others made something, add Saltvedt to.
And it knows investors.
Affects oil prices
When OPEC in November were gathered to discuss cuts in oil production, said Saudi Arabia’s Oil Minister Ali Ibrahim Naimi evident specify that this cut would not come. The markets responded by sending oil prices two US dollars down when the news was announced.
Also when Saudi Arabia’s King Abdullah passed away in January, it struck immediately on the oil price.
Not later than Thursday this week cut Saudi Arabia price of oil for delivery in March to Asia, writes Bloomberg.
– This is another proof that they are determined to protect its market share in China, says chief strategist Bill O ‘Grady at Confluence Investment Management in St. Louis, USA to the site.
Political power
Saltvedt think several countries now fear for their political position of power as a result of the economy hit by lower oil revenues.
Among other Venezuelan President Nicolas Madura used the huge oil revenues to give his people the cheaper fuel.
– He raised the standard of living of the poorest, but has now been have to cut subsidies. There you are afraid of is losing any of the political power, she explains.
Several OPEC countries have tried to start a new collection of the cartel, but without success.
– There was a tension in the new leader in Saudi Arabia would change policy after King Abdullah’s death. But he has retained the same energy minister, Ali Ibrahim Naimi who has ruled with a heavy hand. It is he who has put the new policy, explains Saltvedt.
It makes her not think there will be some change in the near future.
– Now want they go way out. They are tired of going without help from the other OPEC countries. For several years, they cut oil production and they do not want to do everything yourself.
Indirect support
Oil analyst says she has some understanding for this and explains why:
– If Saudi Arabia will cut, it will work as an indirect support to other countries.
The strong growth in oil production in both the US and Russia, has come as a consequence of the Saudi Arabia hooked oil faucet his left, thinks Saltvedt.
– There’ve brought that they have lost market share, while Russia and the United States have increased their. If they are going to cut now, so they will have the help of the others.
Among other Arabic country asked Norway to help with production cuts. It can not, however, do, because Norwegian oil producers follow a neutral market policies. It also makes the United States. Neither Mexico and Russia wants to bind to an agreement with the Arab country, think Saltvedt.
This is the reason why it will not take long before the oil price recovers a stable level.
As long as Saudi Arabia sits on his hind legs and continues to produce oil at full force, exposed this market mechanism, because access to oil is no less the first.
– When going from a cartel to a more competitive market, it takes much longer before you get balance. Before cut Saudi Arabia production to get balance, now we have to wait for the market to find the balance itself, summarizes Saltvedt.
Until now, OPEC has produced between 1 and 1.5 million barrels of oil each lot today in relation to what the market has penetrated.
US fears
There is still one thing Saudi Arabia fear: That the United States should begin to export crude, think Saltvedt.
– It is obvious that Saudi Arabia can pressure from Russia, and not least the United States. I think the US is going to export more oil to come, and there are plenty Saudi Arabia afraid.
Opens Americans for exports, Saudi Arabia get increased competition. Nevertheless, the country has a greater advantage than many of the other OPEC countries, believes Saltvedt.
– Saudi Arabia thinks much longer, they have a longer-term strategy. In addition they have a buffer of large funds to lean on. Many of the other OPEC members, which are now more desperate to get a cut, thinking more shortsighted. Saudia Arabia thinking that they will be a major oil producer for many years, and that they then endure a historically short period of lower oil prices – which will adjust itself eventually.
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