Oil Wars: Why OPEC Will Win

In kind of confused how that spells that OPEC wins "in its conclusion."


There is a point where they can't maintain a rate of production sufficient enough and cheap enough to price out global wells.

And as the article says, they need oil revenue to stay in power. So when they go cheap, they have to sell even more to compensate.

They are hastening their own demise while the world bides their time......and the author thinks that is winning?

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OPEC wins. The US shale producers will shut down first. The reasons are:

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I don't really understand what they hope to gain here. In the long run it will hurt OPEC more than the US. Sure the shale producing companies will take a hit but these fields are not going away. Unless OPEC plans on keeping oil prices around or below $50 forever, these fields will come back online by someone else when the prices increase.

OPEC is not hurting the US economy, if anything it will help it.

This is a win for the US, we needed a relief from these overpriced oil prices.

I think the following is a better article with interesting analysis of Exxon's 2015 Energy outlook:

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Exxon has issued its new Outlook (which is well worth a look). One of the interesting features of this report is its view of conventional oil production, comprising traditional onshore and offshore / deepwater production. In Exxon's view, conventional production peaked around 2005 and is not projected to revisit this level until, at best, around 2040. This is not particularly controversial, but it is interesting to see Exxon acknowledge it. And it's important for our understanding of the long term outlook for the oil supply and oil prices, which I consider in greater detail below.

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Therefore, based on recent shale performance, a longer term price of $85-100 / barrel on a Brent basis would seem justified. This in turn suggests Exxon is being too optimistic about oil sands, deepwater, and conventional ex-OPEC supply. With lower oil prices, demand growth is likely to be somewhat higher than the company is projecting, with shales taking share from more traditional sources. The majors may find the sledding more difficult than Exxon implies.

For the next year, however, expect carnage on the supply side if oil prices remain at current levels for another hundred days. By late 2015, expect a price spike as too many operators will have headed for the exits too fast. Other than shales, as Exxon points out, the conventional supply continues to struggle. Finding conventional oil remains 'no cheaper, no easier', and that has not changed in the last year. If the deceleration in shale production is as severe as the EIA predicts, the global economy will be seriously short on the supply side by this time next year.

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LINK