Friday, January 29, 2016
U.S. Shale oil brought a 'Stalemate' to the world oil market .
'Stalemate' on the world oil market. (Taz).
If oil prices rise, the US producers of shale oil will increase production immediately, which again will lead to excess in production and fall of prices, Head of the Energy markets sector of the Russian Institute for Energy and Finance Nikolai Ivanov told Trend.
“Therefore, such a stalemate emerged on the market that everyone accepts prices the way they are,” said Ivanov.
He went on to add that the extraction of shale oil in the US has completely changed the view on the global energy market, because it is fundamentally different from conventional production.
“Conventional production requires large investments, followed by small operating costs,” said Ivanov. “In case of shale oil it is all the way around - one can instantly start a project without prospecting and exploration stage, because it happens there during production, but shale extraction requires large operating costs.”
Thus, the US shale companies may stop production at low oil prices and resume it at any time, as soon as market conditions seem right to them, said the expert.
He noted that shale companies note the possibility of reducing production at low oil prices even in the memorandums for investors.
In fact, America has become the second "balancing" supplier of the oil market after Saudi Arabia, he said.
According to the US Energy Information Administration (EIA), the total oil production in the US, including shale oil in 2015 was 9.43 mbd.
The talks of OPEC with non-cartel oil producers won’t give any results, said Nikolai Ivanov, head of the energy markets sector at Russian Institute for Energy and Finance, speaking to Trend Jan. 28.
“OPEC is in fact on its last legs,” Ivanov asserted. “Saudi Arabia is taking steps that other countries perceive as unfriendly. There are very strong contradictions within the OPEC itself. Read the full story here.