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Saudi Arabia's Aggressive Oil Production Plan Has Back Fired

<p class&equals;"MsoNormal" style&equals;"text-align&colon; left&semi;" align&equals;"center">Twenty months ago&comma; Saudi Arabia decided to flood the world markets with oil in an attempt to compete with North America and its impressive shale production&period; Well less than two years later&comma; shale production costs are so low that the Saudi Arabian economy is going to take a detrimental hit&period; &nbsp&semi;<&sol;p>&NewLine;<p class&equals;"MsoNormal">&ldquo&semi;The Saudi-led Gulf states have certainly succeeded in killing off a string of global mega-projects in deep waters&period; Investment in upstream exploration from 2014 to 2020 will be &dollar;1&period;8 trillion less than previously assumed&comma; according to consultants IHS&period; But this is a bitter victory at best&comma;&rdquo&semi; writes The Telegraph&period; &ldquo&semi;North America&&num;8217&semi;s hydraulic frackers are cutting costs so fast that most can now produce at prices far below levels needed to fund the Saudi welfare state and its military machine&comma; or to cover Opec budget deficits&period;&rdquo&semi;&nbsp&semi;<&sol;p>&NewLine;<p class&equals;"MsoNormal">The US shale oil output continues to increase primarily in West Texas&period; Scott Sheffield&comma; the outgoing chief of Pioneer Natural Resources&comma;&nbsp&semi;stated that the pre-tax production costs for the Permian Basin of West Texas has fallen to &dollar;2&period;25 a barrel&period;&nbsp&semi;<&sol;p>&NewLine;<p class&equals;"MsoNormal">&&num;8220&semi;Definitely we can compete with anything that Saudi Arabia has&period; We have the best rock&comma;&&num;8221&semi; said Sheffield&period; The cuts in costs is also attributed to advanced improvements in drilling technology and data analytics&period; &nbsp&semi;<&sol;p>&NewLine;<p class&equals;"MsoNormal">Sheffield said the Permian has as much reserves as the Ghawar field in Saudi Arabia and if needed they could abstract 5m barrels a day even with a price spike of above &dollar;55&period; The current production is at 2m barrels a day&period;<&sol;p>&NewLine;<p class&equals;"MsoNormal">The Organization of the Petroleum Exporting Countries &lpar;OPEC&rpar; is made up of the Islamic Republic of Iran&comma; Iraq&comma; Kuwait&comma; Saudi Arabia&comma; Venezuela and 9 other countries that produce roughly 40&percnt; of the world&rsquo&semi;s crude oil&period; So what does the impending ramp up in production by West Texas mean for the OPEC&quest;&nbsp&semi;<&sol;p>&NewLine;<p class&equals;"MsoNormal">&ldquo&semi;Opec&nbsp&semi;may now have to brace for a longer war of attrition than they ever imagined&period; Global inventories of crude oil remain near all-time highs&comma; record volumes are being stored on tankers off-shore&comma;&rdquo&semi; writes The Telegraph&period; &nbsp&semi;<&sol;p>&NewLine;<p class&equals;"MsoNormal">Although West Texas is ready to gear up production&comma; other oil production areas are not experiencing the same growth&period; &ldquo&semi;Forest fires in Canada&comma; rebel attacks in Nigeria&comma; and other global upsets took 4m barrels a day off the global market at one stage over the May-June period&comma; masking the continued world glut&period; These disruptions are subsiding&period; Lost output has dropped to nearer 2m barrels a day&period; That is a key reason why US crude prices have fallen 20pc to &dollar;41 over the last six weeks&comma;&rdquo&semi; writes The Telegraph&period;<&sol;p>&NewLine;<p class&equals;"MsoNormal">If West Texas does boost output by another 3m barrels a day at around &dollar;55 a barrel&comma; Saudi Arabia is going to suffer&period;<&sol;p>&NewLine;<p><&excl;-- &lbrack;if gte mso 9&rsqb;><xml>&NewLine; <o&colon;OfficeDocumentSettings>&NewLine; <o&colon;AllowPNG&sol;>&NewLine; <o&colon;PixelsPerInch>96<&sol;o&colon;PixelsPerInch>&NewLine; <&sol;o&colon;OfficeDocumentSettings>&NewLine;<&sol;xml><&excl;&lbrack;endif&rsqb;--> <&excl;-- &lbrack;if gte mso 9&rsqb;><xml>&NewLine; <w&colon;WordDocument>&NewLine; <w&colon;View>Normal<&sol;w&colon;View>&NewLine; <w&colon;Zoom>0<&sol;w&colon;Zoom>&NewLine; <w&colon;TrackMoves&sol;>&NewLine; <w&colon;TrackFormatting&sol;>&NewLine; <w&colon;PunctuationKerning&sol;>&NewLine; 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Name&equals;"Table Columns 3"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Columns 4"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Columns 5"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 3"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 4"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 5"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 6"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 7"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Grid 8"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 3"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 4"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 5"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 6"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 7"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table List 8"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table 3D effects 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table 3D effects 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table 3D effects 3"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Contemporary"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Elegant"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Professional"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Subtle 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Subtle 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Web 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Web 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Web 3"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Balloon Text"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"39" Name&equals;"Table Grid"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Table Theme"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 3"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 4"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 5"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 6"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 7"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 8"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" UnhideWhenUsed&equals;"true"&NewLine; Name&equals;"Note Level 9"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" Name&equals;"Placeholder Text"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"1" QFormat&equals;"true" Name&equals;"No Spacing"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"60" Name&equals;"Light Shading"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"61" Name&equals;"Light List"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"62" Name&equals;"Light Grid"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"63" Name&equals;"Medium Shading 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"64" Name&equals;"Medium Shading 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"65" Name&equals;"Medium List 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"66" Name&equals;"Medium List 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"67" Name&equals;"Medium Grid 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"68" Name&equals;"Medium Grid 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"69" Name&equals;"Medium Grid 3"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"70" Name&equals;"Dark List"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"71" Name&equals;"Colorful Shading"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"72" Name&equals;"Colorful List"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"73" Name&equals;"Colorful Grid"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"60" Name&equals;"Light Shading Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"61" Name&equals;"Light List Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"62" Name&equals;"Light Grid Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"63" Name&equals;"Medium Shading 1 Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"64" Name&equals;"Medium Shading 2 Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"65" Name&equals;"Medium List 1 Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" SemiHidden&equals;"true" Name&equals;"Revision"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"34" QFormat&equals;"true"&NewLine; Name&equals;"List Paragraph"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"29" QFormat&equals;"true" Name&equals;"Quote"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"30" QFormat&equals;"true"&NewLine; Name&equals;"Intense Quote"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"66" Name&equals;"Medium List 2 Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"67" Name&equals;"Medium Grid 1 Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"68" Name&equals;"Medium Grid 2 Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"69" Name&equals;"Medium Grid 3 Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"70" Name&equals;"Dark List Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"71" Name&equals;"Colorful Shading Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"72" Name&equals;"Colorful List Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"73" Name&equals;"Colorful Grid Accent 1"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"60" Name&equals;"Light Shading Accent 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"61" Name&equals;"Light List Accent 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"62" Name&equals;"Light Grid Accent 2"&sol;>&NewLine; <w&colon;LsdException Locked&equals;"false" Priority&equals;"63" Name&equals;"Medium Shading 1 Accent 2"&sol;>&NewLine; 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