Frackers Plot Some Slick Moves In The Oil Market

The balance of power has shifted in the global oil and gas market, with more muscle outside of OPEC than before.

Politicians, businesses and consumers will remember the days when OPEC ruled the world and could make governments bend to the wishes of oil producers by turning the taps on or off.

Certainly, blackmailing the world by controlling the flow of oil was a crude method, but OPEC maintained the status quo as they saw it for decades by threatening to turn the tap.

Now, other countries outside OPEC have wrested the crown away from boys in the club.

Gone are the days when Saudi Arabia could rule the OPEC roost and influence far larger world powers in the US and Europe.

Saudi king no longer rules the roost

Now, the Saudi royal family wants to sell off Aramco, the state-owned and by definition the royal family’s oil company.

Saudi Arabia would like to see a rise in the price of oil to grease the palms of investors, but the initial offering is not going as planned.

The price of oil has slipped back after a few months of moderate gains taking the price to $50 a barrel, still well away from the heady heights of $100 plus a barrel of two years or so ago.

Now, Saudi Arabia is not the pivot of the oil world. The go to guys are all outside OPEC – the USA, Russia and Iran.

As soon as oil prices move and some slack opens in the market, US frackers can move quicker than the rest to up production to fill the gap.

A few dollars more for Iran

Saudi nemesis Iran is playing the same game as the US frackers.

As soon as the price heads up, Iran tempts buyers to move to them by slicing a few cents off each barrel. The move looks like small beer, but over millions of barrels a day, that slice is a cash mountain.

Saudi Arabia is suffering by losing market share and facing a falling price per barrel that undermines the Aramco sale.

The sell-off will not complete for a good while yet, but the chances of oil prices riding high to make the deal an unprecedented success are limited.

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