Baku, Azerbaijan, Nov.10
By Leman Zeynalova – Trend:
The election of Donald Trump handicaps the OPEC deal, according to the analysts of the Energy Security Analysis (ESAI), US-based global energy consulting company.
“The election of Donald Trump has made US shale more resilient. Meanwhile, the OPEC production negotiations remain difficult. Connecting these two dots suggests this may not be the right time for a deal,” said the analysis obtained by Trend.
There are few details regarding a likely Trump energy strategy, but clearly, he will be pro-business and thus pro-fossil fuels, according to ESAI.
“Furthermore, we expect an approach that tends towards energy autarky. That is, policies or non-policies that encourage the development of domestic energy sources with an objective of greater self-sufficiency and less reliance on foreign sources,” said the analysis.
It is ESAI Energy’s view that the election of Trump subtly shifts the balance of power in the oil market.
“Trump presidency that is pro-business will encourage oil development, permit pipelines, reduce corporate profit taxes and generally make US oil more competitive,” said ESAI.
Raising oil prices will only strengthen the US oil sector, intensifying competition with an industry that now has the full backing of the president and a Republican Congress, according to the analysts.
“This means if a good OPEC deal is unreachable, the Saudis are more likely to walk away under the pretense of taking a “wait and see” attitude regarding the new president, while continuing to keep the pressure on US shale,” said ESAI.
“So, now may not be the time for an OPEC deal. If indeed an OPEC deal falls off the table or is agreed in word but not deed, the recovery in crude prices will be delayed and constrained in 2017,” said the analysts.
In September, OPEC producers agreed during the informal meeting in Algiers to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC in November.