Major oil producing nations of the world in the middle east are making frantic efforts to prop up crude oil prices, which are under relentless pressure from rising shale oil and gas production in the US and record stockpiles.
Global oil and gas major BP Plc expects the crude oil price to stabilise at $50-55 per barrel by the next year, rising from the current levels of about $45 per barrel, the group chief executive Bob Dudley said on Thursday. The stock levels of crude oil would be under watch, he said at a joint press conference with Reliance Industries to announce further investments in KG-D6 offshore block to augment falling gas output. However, the crude oil price may decrease a little bit by the third and the fourth quarter, Dudley said.
It’s a “battle between sheikhs and shale”, Dudley said, referring to the frantic efforts by the major oil producing nations of the world in the middle east to prop up crude oil prices, which are under relentless pressure from rising shale oil and gas production in the US and record stockpiles. “We have to watch the US markets,” he said.
Crude oil continues to trade low despite the oil producers pumping out reduced outputs following a deal between major oil producing nations in November. Global crude oil prices started rising since November-December when the world’s major oil producers, including OPEC (Organisation of Petroleum Exporting Companies) agreed to trim output to help balance the markets and provide a support to falling prices. OPEC, a group of 13 oil producing nations, decided on November 30 to cut global crude oil output by 1.2 million barrels per day. It was first such agreement between these producers since 2008.
However, a rising output of shale oil in the US offset the OPEC cuts and put downward pressure on crude oil price. Oil mostly traded above $50 a barrel since OPEC and 11 other countries started trimming supply in January, before falling again later, as the drilling in the US climbing to highest in a year, countering OPEC’s efforts to limit the supply.
More recently, OPEC and non-OPEC nations, including Saudi Arabia and Russia, extended production cuts further to contain prices.