Radio Interview on The Voice of Russia on Oil Prices and Geopolitics

Interview on the Voice of Russia

Is the Shale Oil Revolution in the US a true reality or just a short lived dream?

A lot has been said, speculated, chanted and so on about the shale oil and shale gas revolution in the United States, which has skyrocketed oil production in the country, specifically coming from Bakken Field in North Dakota, and Eagle Ford and The Permian in Texas, partly due to smart energy policy decisions by Obama administration, which has taken as its flagship reducing foreign oil imports from the Middle East and other volatile regions worldwide, becoming in fact a reality at least for now, raising domestic production to almost 10 MMBPD, ranking among the top 3 oil producing countries in the world along Russia and Saudi Arabia, and so far changing the rules of world oil markets, and prompting as well as revealing a harsh clash of powers and postures within the OPEC over prices, quotas and exposing the drama over who really is the absolute leader of this organization. But talking about the US oil production, it should be taken into consideration certainly reserves and the ratio reserves/production in the country, and in the current environment of a more than bearish oil prices scenario and the break even prices needed to sustain major projects for shale oil production in the US if such a scenario and current situation is here to stay or on the contrary, is a short lived dream for the US in its quest for energy security and self sufficiency. Are the Saudis willing to let this happen, having its long standing ally in the Gulf as a top producer and losing one of its biggest market and thus being this a tremendous game changer in the geopolitics of energy? What about Russia, and the steps that it can possibly take the Kremlin towards this? If the oil price below 80$ per barrel persists at least for a medium term, hardly the most prominent shale oil projects in the US can be sustainable, when one reads news about Iran, Canada talking over quitting prominent infrastructure projects if this  landscape keeps rolling. So which is the true strategy here? The Saudis hitting hard against the U.S and Iran for commercial as well as politico-religious goals of supremacy? Or is it a bilateral well coordinated plan by Washington and Riyadh pointing to the destruction of Russia and Iran? Who will be at the end of the day the true winners of the current situation? The OPEC? The White House? Beijing maybe? And even more so, one persistent question if this shale oil revolution will persist and is here to stay, or will be a short-lived dream shattered by the House Al Saud? Only the time will tell.

Oil Prices,Political Risks and OPEC

As the global outcry for continuing plunging of oil prices below 80$ per barrel and with the possibility to go further below, the chances for political risks increase in oil producing countries which rely the most on a 100$ plus barrel of oil, such as Russia, Venezuela and Iran naming the most prominent and facing a considerable internal social pressure. Here of course its shown how the split within OPEC is broadening, exponentially augmented by the sunni-shiite showdown throughout the MENA region lead by Saudi Arabia and Iran, sadly projected into OPEC dynamics affecting other non arab countries such as Venezuela, Ecuador just to say names. So political risks increase this time on the side of oil producing countries, opening the door for potential social upheavals, rifts, in an environment where the affected states possibly could have to cut social expenditures to balance and adjust budgets, as low as oil prices can roll back, which so far is truly uncertain, and hypothetically  Saudi Arabia only has the answer as the sole swing producer in the OPEC. One thing is true, and this is that the OPEC will no longer be a unified and coherent oil bloc abiding to their country members interest, and only responding to political selfish interest held by the strongest of its members, Saudi Arabia. So as far as this situation keeps unfolding, showing the OPEC a sad picture, theres the question of this organization traditional pivotal role in world energy markets, if its really necessary to control oil prices, to whom it really responds (to its members, foreign powers like the US or China) and of course if the OPEC really works and adequate in tune with the modern world. Pretty sure that after this situation, rather than being the traditional strong cartel that it used to be, the OPEC could have its own image pretty much damaged, and only because of power plays between saudis and iranians for the control of Islam and the arab world.