For OPEC it is more than just balancing the oil market as it claims to do. Saudi has always been the Swing Producer but today either the US or Russia could claim that title. As we look ahead, with geopolitical tension to the side, what is the output for oil now? Forecasts have indicated that by 2030 it will have a 25% market share, equal to that of Coal and Gas but coal is rapidly going out of favour and although the world is awash with gas that too is a fossil fuel and if COP21 does gather momentum all three will be hit environmentally either by taxation or legislation while conservation and renewables make greater inroads.
Meanwhile, the US dollar, the currency in which oil trades are made, is weakening against major currencies and this will impact too. The outlook for OPEC is not clear and cannot be good. They should have foreseen this and diversified.
This has been a difficult Meeting for OPEC and if it is to survive its members will need to re- think and plan their strategies to work in a competitive market at a lower price. For now, it would seem that the oil price will range within the $40-60 bracket, perhaps even lower, dependent upon winter weather and also to geopolitical events.
I have tried to reflect a balanced view in this report. Some will agree and others may have another view but if there are any points that you would like to discuss with me, please let me know.
The next OPEC Meeting has been scheduled for 2nd June 2016. I shall be following events in the meantime and shall be there.
Written By – John Hall
