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Two years on from the start of the oil price crash, Opec’s core GCC members are using ample cash reserves to keep on drilling with an eye to future market share. But for the cash-strapped periphery a collapse in export earnings has left no choice but to slash spending.
It’s been 18 months since then Saudi oil minister Ali Naimi told MEES that his country was committed to a policy of maximizing market share for “highly-efficient…low-cost” producers, however long this took – “two years, three years, God knows” – and whatever the effect on oil prices (MEES, 18 December 2014).
Despite a few ups and downs, and a new Saudi minister along the way, things have more or less panned out as planned: capex for high-cost non-Opec deepwater and non-conventional projects has been slashed with Opec’s share of world oil markets at the highest level in more than 40 years and set to rise further (see p12). Even prices have rebounded from January’s sub-$30/B lows with Brent averaging just shy of $50/B since mid-May. But, contrary to the wishful thinking of Opec’s cash-strapped periphery, raising prices over anything but the long term was never central to the Saudi strategy.
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