Another price drop in oil during 2015 has forced Arab members of OPEC to slash their price expectations for the remainder of 2015. This shows they are prepared to withstand the less expensive crude price for longer in order to defend their market share and curb output of rivals.
OPEC delegates, which included those from its core Gulf countries, see troubles in the economy of the top consumer of energy in the world China, over the short term, and the demand for crude will not have much impact on the supply, which will rise during the fourth quarter.
However, they believe it is going to take over a few months for the weak prices of oil, which dropped to a low of six years Monday, to lower the supplies from the higher cost producers like shale in the U.S. and stimulate more demand.
They are expecting the recent drop in price to help lower the oversupply of crude near the end of 2015, which will lift the price of oil just slightly.
These comments further show that OPEC is sticking to the policy of defending its market share instead of cutting its production to shore the prices up, regardless to what extend the price drops or for how long it takes to balance out the market.
One delegate from Gulf OPEC said that it was better for this market to correct itself, but he did not think the low price would continue. The delegate declined to give his name or what country he was from.
The delegate continued by saying that prices would remain between $40 and $50 until the end of 2015 and will at that time move up to $60, assuming a recovery in China takes place.
Another delegate from Gulf OPEC expected the price of oil to remain between $40 and $50 per barrel through the end of 2015.
Arab delegates from OPEC initially thought oil prices would recover quicker following the shift by the group to its strategy of market share in 2014 that deepened the price decline, saying in December of last year they figured oil would reach $70 to $80 per barrel towards the end of 2015.