Several times, Cyceon warned that one shouldn’t expect any spike in oil prices anytime soon. What one has to look at closely aren’t the charts which show that oil prices have indeed fallen so low that one may think an upturn would be the obvious continuation.
One should rather focus one’s attention on Saudi Arabia which remains the main driver behind oil prices and took back its title of as the world’s largest oil producer from the United States recently. In addition to huge investment plan up to USD 334 billion by 2025 for state-owned oil giant Aramco, the Saudi government has deliberately engaged itself into a market shares war with competing producers, especially US-based shale gas and oil producers.
Although the Saudi offensive has been quite unsuccessful since the US shale sector hasn’t crumbled, the Saudi ambivalence of maintaining low oil prices while repeating meetings towards a limitation of oil output has put much pressure on other producers. Beyond supply that exceeds demand as a main factor behind the collapse in oil prices, Saudi Arabia has been building up the supply side unabated in the meantime.
On the one hand, Algerian, Russian sources said that no oil company will be able to withstand it if prices remain under USD 50 a barrel. On the other hand, countries like Iran, Nigeria aim to increase their national oil production. In the end, Saudi Arabia still holds the balance of power.