A week ago I wrote my story “The falling oil price may presage a future recession”. Along the same lines Gaurav Sharma has contributed a story on Forbes with the title “Saudis Vs Oil Markets: Who’s Playing Whom?” I like to high light these part of his story:
“While the world was focused on Brent and WTI price dips, the OPEC Reference Basket of twelve crude oils from its member countries slipped from $89.37 on 7 October (just days after the Saudi move) to $81.67 per barrel on 23 October. Popular discourse about Saudi motives seems to be that oil minister Ali Al-Naimi does not want to see a repeat of the 1980s when cuts in production saw his country lose global market share.”
“Within OPEC, only Kuwait (needing a breakeven price of $75), Qatar ($71) and United Arab Emirates ($80) can withstand the current oil price decline along with the Saudis. However, others would be left sweating. For instance, Venezuela needs the price to be an unrealistic $162. Iran needs $134, Nigeria $126 and non-OPEC producer Russia around $100. Of the four, Russia can withstand the price decline for now, but persistently low prices will start biting.”
It looks as we might have an oil price chicken race ahead.