Saudis Refuse to Curtail Oil Production as Prices Keep Falling

Published By : 31 Dec 2015 | Published By : QYRESEARCH

The global energy and mining sector has been going through a sea change over the past year after the North American shale boom. This game-changing scenario has spelt profits for individual consumers, while manufacturers and oil companies languish over the current development. Oil prices continue to fall as more and more oil gets deposited into the global stockpile. Supplies are at an all-time high and prices do not show any strong signs of climbing back up any time soon. While climate change fears are boosting the renewable energy markets around the world, oil still continues to be a top fuel resource. As such, the world is in the middle of transitioning to cleaner fuels while shale oil continues to add large amounts of surplus to the global stockpile.

Wednesday’s oil prices showed a 3% slip after the release of new data that the U.S. crude supplies have continues to grow. Meanwhile, Saudi Arabia has promised to maintain its production levels up. They show no signs of relenting until their wells run out completely. The Brent crude benchmark was changed over to US$36.58 at one point, which kept it on its slippery road down to end 2015 at 30% lower. Demands have not been successful in catching up to the supply at all. The latest drop in crude prices has come within a hair’s distance of an 11-year low. This does seem to be great news for individual motorists and industries that rely heavily on transportation. But it’s very bad news for companies that rely on North Sea for their business.

The tactic used by Saudi and OPEC oil producers was simple: to produce enough oil to drive the shale oil producers out of the market. So far, this has failed badly. Neither the North American shale companies nor the OPEC companies seem to show signs of budging away from their production frenzy.

The producers of oil in the Texan and Pennsylvania heartlands have their own ways of maintaining efficiency, which they did after outputs dropped slightly from their peak values in the middle of April.

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