Since the emergence of the shale revolution in the United States, the country has become increasingly hopeful of achieving “energy independence.” However, while U.S. oil companies are increasing production on a large scale, the structure of the global oil market has completely changed. Because of the rise of the United States, the ability of OPEC, led by Saudi Arabia, to change crude oil prices by manipulating crude oil production has declined.
However, after being limited to a passive state for many years, Saudi Arabia is now embarking on a huge gamble. The latest reports on Friday (March 5) showed that at the OPEC+ meeting held on Thursday, the organization decided to maintain the current scale of production cuts in April. Among them, Saudi Arabia will continue to voluntarily reduce production by 1 million barrels per day until May.
It is reported that only Russia and Kazakhstan may increase production slightly in April. Such a decision is somewhat surprising to the market, because according to past experience, as international oil prices rise, U.S. oil companies may increase production significantly. If OPEC countries do not increase production, their global market share may be seized by U.S. companies.
Because of this, Saudi Arabia has needed to make a trade-off between price and market in the past few years. This time, why is Saudi Arabia no longer worried about being seized by the United States? The report pointed out that this is mainly because Saudi Arabia believes that even if oil prices are high, U.S. shale oil producers will not be able to re-emerge and steal OPEC’s market share.
However, it is still unclear whether U.S. shale oil producers will make a comeback. Therefore, Saudi Arabia’s decision is tantamount to a huge gamble. In addition to betting on the end of the glorious era of U.S. shale oil companies that have changed the global energy landscape in the past decade, Saudi Arabia is also betting that demand for crude oil in Asia will cool down in the coming months.
Analysis points out that if Saudi Arabia can win this bet, then the OPEC countries headed by the country are expected to become the biggest winners; once the bet loses, in addition to missing the opportunity to make money, its market The share is likely to shrink. However, Russia has not followed Saudi Arabia in reducing production, so whether Saudi Arabia wins or loses its bet, Russia may become the biggest winner. </p
