Who Will Rule the Oil Market?

The New York Times (Daniel Yergin): A historic change of roles is at the heart of the clamor and turmoil over the collapse of oil prices, which have plummeted by 50 percent since September. For decades, Saudi Arabia, backed by the Persian Gulf emirates, was described as the “swing producer.” With its immense production capacity, it could raise or lower its output to help the global market adjust to shortages or surpluses.

But on Nov. 27, at the OPEC meeting in Vienna, Saudi Arabia effectively resigned from that role and OPEC handed over all responsibility for oil prices to the market, which the Saudi oil minister, Ali Al-Naimi, predicted would “stabilize itself eventually.” OPEC’s decision was hardly unanimous. Venezuela and Iran, their economies in deep trouble, lobbied hard for production cutbacks, to no avail. Afterward, Iran accused Saudi Arabia of waging an “oil war” and being part of a “plot” against it.

By leaving oil prices to the market, Saudi Arabia and the emirates also passed the responsibility as de facto swing producer to a country that hardly expected it — the United States.

Read more: http://nyti.ms/1xZcrdW

 More industry news:

• EIA: Lower 48 Oil Production Outlook Stable Despite Expected Near-Term Reduction in Rig Count: http://1.usa.gov/1uSv4oe

• Fueled by Oil, Agriculture Sector Welcomes Low Diesel: http://bit.ly/1CsoCou

• Commentary: A Tale of Two States and the Perils of Ignoring Science on Fracking: http://bit.ly/1xYQ9Jj

• State to Examine Oil and Natural Gas Potential of Monterey Shale: http://bit.ly/1CYIAW2

• Obama Administration Moves to Block Drilling in Parts of Alaska: http://on.wsj.com/1BfDdzI
• Fracking Bans Could Affect Retirees Relying on Mineral Rights: http://cbsloc.al/1DaRvUX

By Mary Leschper

Originally posted January 25, 2014

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