Russian Federation has also suffered as a result of the oil price drop off, with the rouble touching all-time lows of around 86 to the dollar last week.
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Persistent oversupply, bloated inventories and a slew of negative economic news pressured prices pressured crude oil to 12-year lows Wednesday.
If the Saudis do not cut production, then there is no way that those who have begun benefitting from oil export, like Iraq, or those who hope to benefit from it, like a post-sanctions Iran, would hold back production.
Moody’s has lowered its price estimate in 2016 for both Brent crude oil, the worldwide benchmark, and West Texas Intermediate (WTI) crude, the North American benchmark, to $33/barrel (bbl). “The world desires more oil, and this means more investment”, he added.
In the US, where a massive boom in shale-oil production in recent years has helped push the global market into oversupply, output has stayed higher than expected as producers have cut costs and become more efficient, even while slashing spending on new drilling.
“If there are short term adjustments that need to be made and if other producers are willing to collaborate, Saudi Arabia will also be willing to collaborate”, he said.
“It is vital the market addresses the issue of the stock overhang”, Secretary-General Abdalla El-Badri said Monday at a conference in London.
“While the pace of stock building eases in the second half of the year as supply from non-OPEC producers falls, unless something changes, the oil market could drown in over-supply”.
Nigeria’s Oil Minister Emmanuel Kachikwu said OPEC needs to meet soon, as collapsing oil prices are forcing the oil cartel to reconsider its output policy. Indonesia’s OPEC representative said that only one member of the cartel supported calling an emergency meeting to discuss ways of boosting oil prices.
Gene McGillian of Tradition Energy said the oversold market was ripe for a bounce higher that would likely be brief.
Kuwait’s OPEC Governor Nawal al-Fuzaia hinted on Tuesday that the Organization of the Petroleum Exporting Countries is ready to cut production in an effort to stem the persistent slump in oil prices.
That was over $2 above its last close, although traders said that the jump was misleading due to the roll-over of front-month contracts overnight.
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OPEC’s de facto leader, Saudi Arabia, is bucking any production cutback.
