Published in Quartz

In recent interviews, prince Mohammed has suggested a belief that oil is becoming a much less strategic commodity, and that Saudi Arabia must diversify. His decrees illustrate his determination to move the kingdom away from what he considers an unreliable oil economy.

Some independent analysts think he’s right.

“A few years from now, oil speculation will be as ‘sexy’ as speculating on wheat, paper, or corn,” said Omar Al-Ubaydli, a fellow at the Mercatus Center at George Mason University.

Published in Investor's Business Daily

But a freeze, no matter how many countries join, won’t have a real, fundamental impact on prices, said Omar al-Ubaydli, an affiliated senior research fellow at George Mason University’s Mercatus Center.

“Russia is basically producing at capacity, so a freeze doesn’t really mean anything,” he told IBD. “It just means they aren’t going to invest in increasing their capacity. That’s already something that’s financially unwise to do. So it’s all show and politics and grandstanding.”

While there might be a little spike or dip after the Doha meeting, it won’t set the stage for a quota system in the future, Al-Ubaydli said.

Published in US News
النسخة العربية أدناه

Residents of the Middle East are used to attracting the derision of the rest of the globe's inhabitants with their outlandish conspiracy theories. Local governments' tendency to offer limited justifications for their policy decisions inadvertently contributes to cloak-and-dagger speculation about unremarkable phenomena. Since July 2014, in the domain of oil analysis, the conspiracy theory shoe has switched to the other foot. In an attempt to explain the 70 percent decline in oil prices, leading media outlets have taken to publishing analyses awash with bizarre theories about the root cause. Continue

تعوّد سكّان الشرق الأوسط على الاستهزاء بالآخرين؛ بخصوص نظرياتهم حول مؤامرات عجيبة. ويعود حبّهم للتوهّم حول حتى أبسط الأمور – جزئياً - إلى ثقافة تنفيذ السياسات الحكومية في الشرق الأوسط، دون إبداء أيّ تبرير أو تعليق ملحوظ، من الجهات المسؤولة.
ولكن في الفترة ما بعد يوليو 2014 انتقلت ظاهرة حب نظريات المؤامرات- في مجال تحليل أسواق النفط - إلى بقية دول العالم؛ حيث إنّ وكالات الأنباء العالمية - في محاولتها لتحليل وتفسير هبوط سعر النفط، بما يزيد عن 70% - نشرت نظريات عجيبة، غريبة، عن الأسباب الحقيقية لما جرى.ـ

Published in the Daily Caller

“The widespread perception that OPEC has been operating a coalition in the last 30 years is incorrect,” Omar Al-Ubaydli, a senior affiliated research fellow with the George Mason University Mercatus Center, told The Daily Caller News Foundation. “OPEC countries have been violating their quotas and basically mimicking the production levels of non-OPEC countries ever since the 1970s, and it’s just a strange configuration of incentives that keeps fueling the false perception of the OPEC monolith.”

Al-Ubaydli points out OPEC has always been substantially more fragile and less interested in global politics than it appears to Americans.

“OPEC’s members are locked in a geo-strategic battle that has nothing to do with oil,” said Al-Ubaydli. “For example, how on earth are Saudi Arabia and Iran going to coordinate oil output if they don’t even have diplomatic relations?”

The rise of the United States as a major producer and future exporter of oil completely alters the oil market in a way that isn’t good for OPEC. America surpassed Russia’s production of oil last year, and is now the world’s largest and fastest-growing producer of oil and natural gas. This is almost entirely due to the dual innovations of hydraulic fracturing, or fracking, and horizontal drilling which have made drilling for shale oil economical.

“[S]hale oil means that even if they did coordinate, demand for OPEC oil is more sensitive to price than in the past, because when the price of oil rises, shale oil producers quickly come online and steal OPEC market share…shale oil places an effective price ceiling that won’t be relaxed any time soon. While I expect oil prices to return to around $50-$60 a barrel in the coming 18 months, they won’t rise much more than that.” Continue

Published in Investor's Business Daily

Omar al-Ubaydli, an affiliated senior research fellow at George Mason University’s Mercatus Center, pointed out that Saudi Arabia and Iran have cut off diplomatic ties with each other, and Russia is engaged in a proxy war in Syria against other OPEC members.

“The idea of cutting production is never going to work in the near future,” he told IBD. “In order for a cut to work, you need to be able to effectively monitor each other.”

Al-Ubaydli sees a drop in production from global oil markets over the next 12 months, as output from older oil fields decreases and new investment slows.

“Output will decrease, but not because cartel members are sitting at a table playing with numbers,” he said. Continue