Baku, Azerbaijan, Jan. 9
By Seymur Aliyev - Trend:
It all has started! Today, traditional oil producers, including the ones in Azerbaijan, received "good" news: the first company engaged in the production of shale oil went bankrupt in the US.
Given the current oil prices, one can confidently say that it is just the beginning.
A vicious circle emerged as a result. The companies producing shale oil helped reduce its value on the world market, and as a result, they began to bear losses themselves. Many companies that produce "unconventional" oil, were insured against price reductions, and this year the validity period of the insurance expires.
Naturally, the reduction of supply on the market will affect the price of the product and so, one can expect an increase of the price for oil in the near future. However, the question arises: will the price of oil reach earlier recorded indicators - around $110 per barrel? Probably not.
Today's decline in world oil prices is not only caused by natural factors or supply and demand economic theory. It is also the result of reluctance of Arab states to reduce production volume and thereby refusing the additional income they would receive, as well as current political crises impacting the world market.
Whatever the reason for the decrease in oil prices, they will increase after the shale players drop out of the game.
Today, it became clear that the production of shale oil is expedient only after the depletion of the "traditional" hydrocarbons. It is good news for all the countries whose budgets are formed with the incomes from oil export. Azerbaijan is also among these countries.
Edited by CN
Seymur Aliyev is the head of Trend Agency's Russian News Service
