(Newswire.net — December 17, 2014) — Controlling the oil reserves in Iraq and Lybia, US was on their way to becoming self-sufficient in oil and in power to protect the petro-dollar. In response, OPEC countries started to pump more oil into a market deliberately lowering the price. That move strikes all oil producing countries, OPEC included, however, not in the same way.
Given the fact that producing the oil in the US is much more expensive than in OPEC countries, the price of oil below $95 per barrel is not acceptable. Nonetheless, today’s price is less than $60 per barrel with tendency to fall further.
It is not so much the low price, but the slow recovery that is not yet on the horizon, which drives other countries into a recession. The problem could be solved if OPEC countries cut their crude output, however, at this time that’s not going to happen.
On November 27, OPEC’s 12 members made the decision not to cut crude output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the UAE energy minister Suhail Al-Mazrouei said.
According to Blumberg, OPEC is pumping 30.56 Million barrels a day, which is significantly more than it had previously agreed. The result is lower prices in the oil market, which finally dumped the price of gas in the US.
Mazrouei told Bloomberg at a conference in Dubai, that OPEC is waiting for the market to stabilize by itself. He said current conditions don’t justify an extraordinary OPEC meeting.
“We need to wait for at least a quarter” to consider an urgent session, he said.
Some countries, however, are not so relaxed about it, and the United States is among them. US oil drillers last week idled more rigs than it has in almost two years. According to Bloomberg, the number of rigs in the US is declining from a record 1,609, threatening to slow the shale-drilling boom that has propelled US production to the highest level in three decades.
OPEC expects US to reduce drilling and start spending the reserves.
“Our expectation in OPEC is that after 2020, the oil industry in the US will decline due to the nation’s low reserves,” OPEC Secretary-General Abdalla El-Badri said, adding that the US won’t become self-sufficient in oil and will continue to depend on Middle Eastern supply.