On the face it appears that the US and Saudi Arabia are
fighting ‘price war’, the perception is negated because both the countries
connived to take the price above USS147/barrel. They are still supporting each
other to punish Russia and Iran.
Oil from many countries is being pilfered by ISIS, which is
being bought by those who claim to be fighting a war with the most brutal
outfit, drawing strength from selling pilfered oil. In a way Kurds also don’t
have the ownership of oil which they are exporting from Iraq.
Countries called P5+1 agreed with Iran to remove sanctions,
but the restrictions still continue. Iran has borne the brunt most, because its
oil related revenue has nearly halved and it is not yet clear when will it get
the chance to boost oil exports.
Initially, Saudi Arabia was not willing to curtail daily
production by OPEC members, but now it is talking about containing production provided
Russia and other non-OPEC members also agree to curtail output.
With winter approaching fast, consumption of heating oil and
gas is expected to rise but stockpiles are still hovering at record levels.
It may be true that all eyed are fixed on 4th
December meeting of oil cartel but little is expected to change. The three
giants, the US, Saudi Arabia and Russia are not likely to change their stance.
The credible signs of improvement in the US economy are
missing, Chinese economy is still faltering and IMF has already curtailed rate
of global economic growth.
One point is clear that oil demand is not likely to grow
significantly in the near future. Therefore, the only option available to oil
producing countries is to curtail production. Many analysts are of the view
that December 4 will come and go but the glut will continue.
Let no one forget that the biggest beneficiary of declining
oil prices are OECD, are they ready to take a hit? The reply is a loud NO!
