Keeping the OPEC production will lead to lower oil prices for a long period, with negative effects on the budgets of the Member States, highlights the International Energy Agency (IEA), reports MarketWatch, according to Mediafax.
This marketing strategy is mainly the creation of Saudi Arabia, implemented in order to erode the long-reaching movement of other competitors. Indirectly, it strikes the budgets of fellow cartel members, and even in its own budget.
Several investment banks and oil companies anticipate that oil prices will be in 2016 at about 60 dollars per barrel, far below the level needed to balance the budgets of oil producers, including Saudi Arabia.
IEA warned on Tuesday, that a long-term strategy of OPEC to ensure a larger share in the oil market could, among other factors, keep the price of Brent crude, the reference to the London Stock Exchange, at about 50 dollars per barrel up at the end of this decade, says Bursa. Revenues from oil exports of OPEC Member States would be 25% lower at a quotation of 50 dollars per barrel.
And for the advocates of the measures to combat global warming, the significant drop in oil prices is not an advantageous development, said the IEA. A small price of crude does not motivate the development of electric cars and biofuels. Also, low oil prices could deter investments of about 800 billion dollars to improve the energy efficiency of cars, trucks and airplanes, writes economica.net.