◆ Among the OPEC members,Saudi Arabia is the most resolute in"not cutting production".On the one hand,Saudi Arabia wants to maintain its market share;On the other hand,Saudi Arabia has the"confidence"not to cut production because of its cost advantage and reserves advantage.
On January 23,King Abdullah of Saudi Arabia died and his brother Salman became the new king.News of the succession has focused many eyes on the royal family,the oil-rich nation's hub of power and wealth.At the same time,Saudi Arabia's oft-repeated statement that it will not reduce its oil production in order to raise the price of oil has once again caught the world's attention.
International crude oil prices have halved since June 2014.Faced with the situation of oversupply in the crude oil market,many experts have analyzed that it is difficult for the international oil price to rise in a short time without large-scale production reduction or temporary outbreak of geopolitical conflicts.
However,at a time when low oil prices have become the new normal,OPEC members have not reduced production to coordinate crude prices.Among them,as the world's largest oil exporter and OPEC's biggest producer,Saudi Arabia is to"take the lead in"expressed"capricious"attitude,give up the production,such as"can be in at least eight years successfully cope with low oil prices","we will again with will,wisdom and experience through the plunge in turbulent times"have been all kinds of media such as the declaration.
Why is OPEC,led by Saudi Arabia,so capricious in refusing to cut its oil output?According to some U.S.media accounts,a key purpose of OPEC's"inaction"in the face of falling oil prices is to maximize the market share of international energy sources,thus hurting the U.S.competitor until high-cost producers are squeezed out of the market,making it unprofitable for producers of alternative energy such as shale oil.
On the one hand,Saudi Arabia,with its low oil costs,low debt and relatively ample foreign exchange reserves,can still make a profit by watching international crude prices"fall into free fall".On the other hand,the country is currently cutting government spending.As Mohammed Al-Sabah,a former senior adviser to the oil minister,puts it:"The country can only cope with four years of low oil prices at best without cutting government spending."At the same time,for Saudi Arabia,whose national economy is heavily dependent on crude oil export,the decline of oil revenue will inevitably affect energy input in other fields,thus restricting the country's energy diversification development.When the crude oil price reaches the bottom line one day,risks will inevitably occur.Moreover,other MEMBERS of OPEC may not have the financial resources to"sink"along with lower prices.
In fact,some Of Saudi Arabia's refineries are already operating at lower rates because of weak overall demand for crude oil and increased competition in the market for finished fuels,making them unprofitable and more difficult to operate than their U.S.Gulf Coast counterparts.Moreover,the strategy of temporarily sacrificing crude prices to gain market share,even if it temporarily endangers U.S.shale oil producers,does not necessarily work in the long-term international energy game.
At present,the whole Middle East region is in turmoil and still under the threat of terrorism.Saudi Arabia's willful refusal to cut oil production,with its foreign reserves dwindling and unemployment rising,is questionable.It may also be a long-term challenge for the new king,Salman.