Oil prices are still plummeting at record rates as well as the most prominent global stock indices, since the start of the crisis of the oil-exporting countries “OPEC” and Russia over oil market shares and production rates in what has become known as the “oil price war”.
Russian President Vladimir Putin knows the fragility of the American oil industry and that it is based on very high debt rates.
Therefore, when Saudi Arabia called at OPEC’s last meeting, to reduce production in order to reduce the quantities of oil offered in the markets to maintain market stability, the Russian President decided to veto that.
Russia’s refusal to join and cooperate within its fragile alliance with OPEC seeks in part to dump US oil companies from oil shale, which rely heavily on higher oil prices in a sea of cheaply priced crude, according to “CNN”.
Putin’s goal is to wrestle to restore the market share of American prospectors whose growth rates, despite their dependence on debt, led to taking the title from Russia as the world’s largest oil producer in the year 2018, in a way that reflected American superiority and how technology reshaped the global energy landscape.
Matt Smith, head of commodities research at the energy research firm Clipper Data, described what Russia is doing as “a response aimed at crippling the oil industry from shale in America”, while Helma Croft of RBC Capital said that “Russia’s strategy appears to be not targeting Not only the oil industry companies from oil shale, but also the policy of forced sanctions that enabled the boom of the energy sector in America.
The Kingdom of Saudi Arabia’s response came as a surprise, as the Kingdom, after failing to reach an agreement, escalated the situation, as analysts said that the Kingdom had reduced its official selling prices for April by 6 dollars to 8 dollars, in an attempt to restore market share and increase pressure on Russia.
Amin Al Nasser, President of Aramco, which is considered the jewel of the petroleum industries in Saudi Arabia, announced, on Wednesday, that he had received guidance from the Kingdom’s Energy Ministry to raise the maximum daily production level from 12 to 13 million barrels per day, in a move to which the UAE joined in a statement made by Sultan Al Jaber, The Minister of State and CEO of ADNOC and its group of companies, where he said: “In line with our strategy for growth, expansion and increased production, ADNOC has the potential to supply markets with more than four million barrels per day in next April, and we are also working to accelerate progress towards our goal of reaching a production capacity of five million barrels a day”.
The Russian Energy Minister, Alexander Novak, said on the state channel Russia 24 that “the doors are not closed” to reaching an agreement with OPEC countries in the future… However, Putin is known for his non-retreat, which indicates the possibility of a longer period of this crisis…
In The time when Saudi Arabia is able to force Russia to reduce its oil production, prices will rise quickly.
It is reported that American oil production, which is led by oil shale, has more than doubled over the past decade to its highest levels ever, to levels that the United States of America is pumping more oil than any other country, including Russia and Saudi Arabia.