Saudi Arabia and Russia Aren’t Feeling OPEC’s Market-share Pain
OPEC may be losing its share of the global oil market, but not all losses are spread equally.
Though the producer group’s portion of the market is now its lowest in almost 30 years, nearly all the pain is being inflicted on Venezuela and Iran, says Bjarne Schieldrop, chief commodities analyst at SEB AB. The Latin American country’s output is in free-fall under the Maduro government, while Iran’s supplies are being hit by U.S. sanctions. At the same time, Saudi Arabia is only producing marginally below its average level for the previous four years, while Russia is higher than that, according to Schieldrop.
That makes it easy to see why the major producers have been relaxed about keeping production cuts as OPEC and its allies meet in Vienna this week. While Iran’s output has fallen by about 40% since the start of last year, Saudi Arabia’s is down just 2% over the same period.
“The only price they have to pay is to hold back supply slightly and refrain from growing their production along with global oil demand growth while harvesting an oil price of $60-$70/bbl,” Schieldrop said.