Colver Technologies: Oil cartel, OPEC runs the risk of oil prices sinking to $60 a barrel if it chooses to maintain production at current levels.
Pressure on the likes of Saudi Arabia and Kuwait from smaller producers like Nigeria, Venezuela and Iran is unlikely to result in a cut in production within the Organization of Petroleum Exporting Countries (OPEC) according to small-scale GTL production plant company, Colver Technologies.
“The smaller producers haven’t budgeted well and need higher prices for their oil but Saudi Arabia and Kuwait want to put pressure on oil shale producers who can’t produce economically with prices that low,” said Gus Stuyvesant, Chief Operating Officer at Colver Technologies.
The price of oil has fallen sharply from over $100 to a little over $75 a barrel in just a few months because of weakening demand and a glut in supply. OPEC was due to meet in Vienna, Austria to decide whether or not to cut production, thereby reducing supply and driving prices higher.
“Short term issues are driving the weaker OPEC states to push for a cut but if you’ve been watching this industry as long as we have, you’ll know that even if a cut were agreed, the smaller producers almost never cut production hoping instead that the Saudis and Kuwaitis will honor their obligations to the collective,” explained Stuyvesant.
Colver Technologies says it expects downward pressure on crude oil to continue in the short term but warns that shale oil and tar sands producers will find the going tough as prices drift lower.
Many commentators believe that OPEC has rendered itself obsolete by not acting to reduce prices sooner and, in doing so, discouraging the current shale oil boom in the US but Stuyvesant isn’t convinced. “The value of the US dollar is playing a far greater role in this than people give it credit for and one should never underestimate China’s ability to ramp up demand with a simple interest rate cut,” he concluded.
About Colver Technologies
Colver Technologies’ modular GTL systems revolve around the Fischer-Tropsch reactor, a conversion technology developed in the 1920s by Franz Fischer and Hans Tropsche in Germany in 1925. It facilitates the production of significantly cleaner-burning liquid fuels like diesel and jet fuel from natural gas that contains no sulfur. We are committed to doing our part to drive uptake of GTL fuels as global efforts to reduce emissions increase and have invested heavily to ensure the continuing development of this highly attractive alternative to conventional energy production.