The Oil and Gas Market Will Balance Itself Out

Posted by on Sep 18, 2015 in Uncategorized | Comments Off on The Oil and Gas Market Will Balance Itself Out

The OPEC Governor for Kuwait, Nawal al Fuzaia recently explained that the oil and gas industry would balance itself but, he claims that the industry needs to be patient.

 

The Governor made the statement whilst attending the Gulf Intelligence Energy Markets Forum in UAE. Fuzaia also explained that the imbalance that can currently be seen in the industry is a result of many factors and not just one. Previously, the imbalance has been put down to a decline in economic activity in China.

 

Fuzaia explained that China’s economic activity will resume and its slowdown is only a short term problem. He also mentioned that he did not think it would have an impact on the OPEC market share.

 

Back in November 2014, OPEC changed its policy. They made a radical decision and decided to go against prices by reducing output. This was because they wanted to defend their product and market share from other high cost supply sources and U.S. Shale Oil.

 

This policy change was not welcomed by OPEC but, Saudi Arabia and other countries located in the Gulf have stayed true to their word even though the price of oil has dramatically dropped. In fact, the price of oil has seen more than a fifty per cent decrease over the last year.

 

One reason why OPEC is unhappy with the policy change is that some of their members who are less economically secure have been deeply hurt. For example, Venezuela has been deeply impacted by the drop in price.

 

Fuzaia has further explained that in order for operations in the oil and gas market to improve, the company need more transparent data from China. This is to help those in the market better understand their requirements and demand.

 

He has clearly stated that this is not because those involved don’t trust China and the numbers they have given but, they are worried that the numbers they have given are a calculated demand and not the actual demand. These two numbers could be the same but, Fuzaia has explained that these two numbers could also be completely different.

 

OPEC are looking at ways to improve the oil and gas industry and in particular are hoping to support the Chinese economy. OPEC want to see sustainable and stable growth in both China’s demand and recovery but, if the country experiences a decline in demand, Kuwaiti crude oil would have to go to other markets.