The OPEP made it clear during Friday’s meeting in Wien that the fight between the oil productors and United States to control the international oil market is still working. More than that, it was also take into account the viability for actual prices with the new extraction technics like fracking that are currently working.
The first thing that was clear after the meeting in the Austrian capital is that the OPEP is going to continue the production rythm as nowadays: 30 million barrels a day. Since next meeting in June 2015 it seems that this is not going to be changed.
But the reality in markets is different. Prices have have entered into a downward spiral that has not slowed , putting the last week the price of a barrel of Brent below $ 70 and Texas below $ 65 , something not seen since July 2009.
It is the moment to take a look back to what observers like Goldman Sachs, Versus Wealth Management or Black Rock announced months ago, that this downward spiral was there. The truth is that it has anticipated more than expected as it was thought for the first months of 2015.
Once seen this new prices stage, we have to ask about the opinion they have for next year as most of them think that this will continue going down till a $60 dollars for the brent barrel.
Can the OPEP continue with this policy without consecuences? The truth is that, by now, inside the organization there are two positions.
On the one hand, Saudi Arabia would be able to assume this prices during a while. It has to be taken into account that it is one of the leader countries talking in terms of production, as their balances can afford this low prices that, they expect, that will react the economic recovery and, in the long term, help making demand grow.
On the other hand are countries like Venezuela or Iraq that insisted on limiting daily production because these prices unbalanced budgets and therefore their balance.
The oil experts are the ones that say tha, in case of a situation like the 2008, when temporary the oil price got to the $35 dollars but afterwards it was stablished in the 70-75, in June would be the moment for a new policy to low the daily production in order not to charge the poorest countries with this low prices.