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Report of the International Energy Agency: the international oil price has not touched the bottom line of the market

report of the International Energy Agency: the international oil price has not touched the bottom line of the market

January 19, 2015

[China paint information] on January 16, the International Energy Agency issued a monthly crude oil market report saying, "unless there are major interference factors, the crude oil price will not rise immediately, but many signs show that the price reduction trend will change." The International Energy Agency also admitted that "it is only a guess where the bottom line of the market is", but the decline in oil prices will eventually start to curb production and boost demand. The trend of international oil prices is still a topic of concern but difficult to guess

On January 13, Venezuelan President Maduro visited Algeria to continue his visit to member countries of the organization of Petroleum Exporting Countries (OPEC). Previously, he had visited countries such as Iran, Saudi Arabia and Qatar to lobby these countries to take joint action to boost oil prices. Maduro called for an emergency OPEC meeting in the first quarter of this year to return the international oil price to $100 a barrel by reducing production

however, with the continuous decline of international oil prices, the major oil producing countries in the Gulf region are still bearish on oil prices. Maduro's "vertical and horizontal" has not received a positive response from Saudi Arabia, the most important OPEC oil producer. Ali Naimi, Minister of oil and mineral resources of Saudi Arabia, said, "it is unfair to require OPEC member states to reduce oil output under the condition that crude oil production of non OPEC member states remains unchanged". We "may not" see oil prices return to $100 a barrel. This statement may imply that Saudi Arabia will continue to maintain its oil production in the future

the United Arab Emirates, another important oil producer in the Gulf region, also insisted on taking no measures to prevent the decline of oil prices. On the 13th, UAE energy minister mazruyi said that OPEC could no longer "protect" oil prices. "OPEC will not change its crude oil production strategy in response to the decline in oil prices, and oil prices will not rebound suddenly." It is reported that the UAE will adhere to the long-term crude oil production plan and increase its crude oil production capacity to 3.5 million barrels per day by 2017

Iman, a researcher at the Egyptian regional strategic research center, said in an interview with this newspaper that due to the slowdown in global economic growth and the decline in demand for crude oil, if the existing supply remains unchanged, the oil price is still likely to continue to fall. Punch a punch with a spherical end against a sample clamped in the cushion mold and film to form a dent. George Perry, a senior researcher at the Brookings Institution in the United States, told this newspaper that in the short term, with the completion of oil wells that began drilling last year, the production of shale oil in the United States will continue to grow. Therefore, the current global oil supply will continue to exceed demand, and the inventory of oil and oil related products, which has been at a historical high, will further rise. In other words, oil prices are likely to fall further in the short term

the price war makes the prospect of the international oil market uncertain.

Naimi once told the media that Saudi Arabia would "defend market share". This may break the real motivation of Saudi Arabia to maintain crude oil production against the background of the current sharp decline in oil prices

in the early 1980s, the price of crude oil soared. Under the temptation of huge profits, many investors explored oil in the United States, and the oil production of the United States increased significantly for a time. At the same time, other OPEC member states also ignored the production quota restrictions in the face of interests, which eventually led to the Saudi market, which strictly complied with the quota production, being nibbled by others. After several invalid calls, Saudi Arabia decided to take advantage of its low cost to expand production and lower the price of crude oil to crowd out its competitors. After six months of price war, the international oil price fell from $32 per barrel in November 1985 to $10 per barrel in March 1986. The oil production of many OPEC member states and the emerging small and medium-sized oil enterprises in the United States failed, while Saudi Arabia once again won its hegemony in the international oil market

there are striking similarities between the current oil market game and the 1980s. When facing the threat of losing its market share and weakening its influence, Saudi Arabia will take all means to suppress its competitors. Sufficient foreign exchange reserves are an important factor to resist the risk of falling oil prices

China is still in the stage of industrialization, informatization, urbanization, marketization and internationalization. According to the report released by Moody's, an international credit rating agency, in December last year, the six Gulf countries have sufficient reserve funds and can withstand the impact of falling oil prices. According to the International Monetary Fund, Saudi Arabia's foreign exchange reserves are between 700billion and 750billion US dollars. At the same time, the low oil production costs of oil producing countries in the Middle East also make it possible for oil prices to continue to decline. The Washington Post recently quoted Naimi as saying that Saudi Arabia's oil production cost is only $4 to $5 per barrel. Although some analysts believe that Saudi Arabia's oil production cost is $10 to $20, these data show that even after halving, the oil price is still within the price range acceptable to oil producing countries in the Middle East, which provides space for enterprises exporting food contact materials to pay attention to the new EU regulations under the continued oil price

The United States is not a lamb willing to be slaughtered. Although international oil prices have fallen again and again, U.S. crude oil production may still increase this year and next. According to the report released by the energy information administration of the U.S. Department of energy on January 13, the average daily output of U.S. crude oil in December 2014 was 9.2 million barrels. In 2015, the daily output of U.S. crude oil is expected to increase to 9.3 million barrels and 9.5 million barrels in 2016. 2016 is expected to become the second highest year of crude oil production in the history of the United States

George Perry said that the adjustment of the oil industry is already in progress, and after a few quarters, the global oil output will decline. The international oil market should recover from the collapse this winter. However, in order to squeeze out enough high-cost shale oil in the long run, the international oil price must remain significantly lower than US $100

Perry said that the demand for oil largely depends on the energy efficiency of today's cars and aircraft, which will not change much in the short term. Therefore, the adjustment of the oil market will mainly come from the supply side, that is, low oil prices will force some high-cost oil fields to close early, and urge producers to abandon many new drilling plans. He further explained that most of the world's oil output growth came from shale oil in the United States and oil sands in Canada

Perry said that the development of shale oil and gas fields in the United States is mainly financed by bank loans and the issuance of high-yield bonds. With the sharp decline in oil prices, the earnings of many projects will be affected, and many credits provided to these projects will default. In fact, not only has the shale oil and gas industry in the United States felt the economic winter, but the economy of major oil producing areas in the United States has also been affected by the plunge in oil prices. The report released by the Federal Reserve on January 14 said that economic growth in energy rich regions in the United States is showing signs of slowing down

In an interview with this newspaper, Iman also said that although the Gulf oil producing countries led by Saudi Arabia ignore the continuous decline of international oil prices in order to maintain their market share, these countries are also under great economic pressure. Whether the Gulf oil producing countries have a bottom line for the decline in oil prices is of great concern. If oil prices continue to fall beyond the tolerance of the Gulf countries, I am afraid they will also adjust their supply