In spite of a protracted period of ultra-low oil prices, world’s black gold production experienced a mere contraction last year. Global leading crude producers did not dare to cut their output volumes, fearing to lose the market share. In the light of a price war, it looks difficult to agree and implement any measures intended to boost crude prices.
As experts at Wood Mackenzie reported, global oil production contracted by only 0.1% in 2015. No one wants to yield superiority. Producers are ready to sacrifice new projects and cut investments to keep their current output intact. Analysts are painting two likely scenarios which could lead to a visible decrease in the world's oil output. The first one implies that crude prices could hover at the level of $30 a barrel indefinitely. The second possible scenario suggests a slump to the historical lows, which can be compared to the levels visited during the 1970s oil crisis. The first scenario tends to be more feasible; the only thing is, experts have not come to an agreement on how long it can take.
As you remember, in 2014 most experts forecasted a considerable contraction in crude production by early 2016. They however could not foresee two major factors, including endurance of the US shale industry, especially shale drillers with a production cost of about $22.5 per a barrel. The second factor disrupting the forecast is a lower production costs as a result of depreciation of national currencies in such countries as Russia and Brazil.
