Bloomberg’s Grant Smith and Maher Chmaytelli write that Saudi Arabia will continue to push for high output levels in order to beat back U.S. shale at an OPEC semiannual meeting on June 5th, and will have OPEC backing to do it, extending a strategy that Saudi Arabia and OPEC see as working.
The decision by the Saudis and OPEC follow an increase in oil’s price by up to 40% since a 6-year low in January, the Bloomberg report notes. Although some OPEC members have resisted such high output levels, Bloomberg’s survey of the participating members finds willingness to participate from these members.
The report by Bloomberg comes on the heels of a Goldman Sachs research note that predicts a price of oil near $45 a barrel by the fall.
Evidence that Saudi pressure on prices is affecting the U.S. market is mounting. James Stafford from the CSM, with sources for the data linked inline, highlights just how hard-hit the U.S. market is:
“Rig counts are down by nearly 1,000 (or nearly 60 percent) since hitting a high in October 2014. Spending on some of the world’s largest projects has been cut by a combined $129 billion, a figure that could balloon to $200 billion by 2016. The spending and drilling contraction is finally leading to some small production declines.”
