World Bulletin/News Desk
Saudi Arabia and Gulf countries are to maintain their market share and resist falling oil prices, say experts.
The Organization of the Petroleum Exporting Countries, OPEC, convened on Nov. 27 in Vienna to devise a strategy against falling oil prices, and decided not to cut production for the first half of 2015.
The global benchmark Brent crude oil price has decreased nearly 40 percent since June, and stabilized around the $70 per barrel mark this week, the lowest point in four years.
"Saudi Arabia and Gulf countries aim to maintain their market share," said David Koranyi, Director of Eurasian Energy Futures Initiative Center at Washington-based Atlantic Council and "they are looking at Asia, Europe and the U.S.," he added.
"Gulf countries have abundant financial reserves and essentially no debt to worry about. Thus they calculate that they can weather a sustained period of lower oil prices between two to four years," he added.
Gulf countries signaled prior to the meeting that they will not make any production cuts, while Saudi Arabia lowered its official sale price to the U.S. to compete with the booming domestic oil production and maintain its market share there amid falling oil prices.
"Saudi Arabia could weather a period of low prices more comfortably than most other major oil producers," said Richard Mallinson, a geopolitical analyst at London-based energy market consultancy Energy Aspects.
"It has substantial foreign currency reserves, sovereign assets and low levels of debt," he added.
Meanwhile, before the meeting in Vienna, Iran, Venezuela, and some other OPEC members favored lowering oil outputs to increase the falling oil prices, in order to sustain their economies dependent on revenues from oil exports.
Amid falling oil prices, Iran may make compromises in its nuclear talks with P5+1 to soften sanctions which hurt its oil revenue.
"Iran needs oil prices well above $100 per barrel to balance their budget," said Koranyi.
"With the sanctions still in place, the oil price drop is further squeezing the regime in Tehran," he added.
The sanctions on Iran harm its oil exports and income while the nuclear negotiations between P5+1 countries and Iran have been extended until June 2015.
United States, Britain, China, France, Russia, plus Germany maintain that Iran is secretly developing nuclear weapons in its uranium enrichment program, while Iran says that the program is for peaceful use of nuclear energy.
Despite having the fourth-largest proved crude oil reserves in the world, Iran's crude oil production decreased dramatically due to the sanctions, from 4.2 million barrels per day in 2011 to one million barrels per day in 2013, according to the U.S.' Energy Information Administration.
The International Monetary Fund estimates that Iran's oil and natural gas export revenue fell in the 2013-2014 fiscal year by 11 percent to $56 billion, says the U.S. agency.
However, in the first five months of 2014, Iran's crude oil and condensate exports averaged 1.4 million barrels per day, roughly 300,000 barrels per day higher than the 2013 average, the administration quotes from the International Energy Agency.
"I do not expect that lower oil prices will make Iran more willing to compromise in a nuclear deal," said Mallinson, adding that Iran has already adapted to a ‘resistance economy’ to cope with sanctions, which may help it cope with the hardship of lower oil prices.
"Iran’s leaders have staked much of their authority on standing up to the West and cannot afford to be seen to give in, so they need a deal that is favorable to Iran," he added.
The nuclear negotiations on Nov. 24 concluded the extension of the talks until June 2015, while $700 million of Iran's frozen assets will be released each month. This will provide the country with a total of $4.9 billion until the beginning of July, 2015.Güncelleme Tarihi: 04 Aralık 2014, 15:08