The another outbreak of slate revolution in the USA can reduce to nothing the efforts of other oil producing countries to stabilize the global oil market, according to the blog of Chief of the Commodities Unit of IMF Research Department Rabah Arezki and its economist Akito Matsumoto, RIA News reports.
In early March, Executive Director of the International Energy Agency Fatih Birol announced about the second wave of slate revolution in the USA, which will have a significant impact on the global oil market and prices for “black gold” within the next five years.
“The increase of oil production from slate deposits in the USA can rapidly reduce to nothing the most part of, if not the whole, reduction of oil production by OPEC and non-OPEC countries, because in the case of slate deposits, the extraction from oil wells can start within one year after making initial investments, unlike the usual investments in oil production, which start paying off only in several years”, they wrote.
In this regard, the analysts call the slate deposits “the biggest threat to attempts to achieve price stability”.
In the meantime, they note that “in January, the levels (specified in the stabilization agreement) were observed for almost 90%”. “Such level of observance is in sharp contrast with usually poor performance by OPEC members, taking into account the indicators, set in the previous agreements as to the production volume”, - Arezki and Matsumoto write.
The experts add that “OPEC agreement accelerated the rebalancing of oil market, at which the oil supply meets the demand, and it is accompanied with stable prices”. “The OPEC agreement as to the production volume should lead to the reduction of excessive supply, at least temporarily”, they suppose.
“The futures markets show that the oil price expectations were firmly fixed at about 50 dollars per barrel. The OPEC agreement led to the release of certain forces, which will limit its force within the next few years”, IMF experts conclude.
On November 30, 2016, OPEC agreed on the reduction of its production by 1.2 million barrels per day from October level. On December 10, eleven non-OPEC countries approved the reduction of its production by 558 thousand barrels per day, including Russia by 300 thousand. The agreement is concluded for the first half a year of 2017 with an option to prolong it.
In the meantime, the USA, one of three largest oil producers in the world, cannot conduct negotiations with OPEC (as any cartel agreements are prohibited by their legislation).
