The observer of what is happening in some OPEC countries find some undesired voices that question the successful, wise and balanced OPEC strategy which –in my opinion- was the main reason for the unprecedented oil prices stability in the global oil markets in the last few years. The stability of the prices of OPEC basket during the last three years (2011, 2012, and 2013) to reach an average price of $106 a barrel despite of all the challenges and the many factors that could have negatively impacted the oil prices confirms this successful strategy. This price is considered fair by all standards for producing and consuming countries alike. Furthermore, we also find the perfect balance of supply and demand influenced by this strategy and the fact that the relatively high oil price did not impact the improving global economic growth. In fact, the oil price stability led to the gradual global economic recovery from the worst economic recession in the recent decades. This high average oil price has also encouraged a lot of countries and oil companies to invest in exploration, development and production of what is so-called shale-oil, which in turn helped to meet the steady increase in the global oil demand. The slight increase in shale oil production indirectly relieved the pressure on the major OPEC countries especially GCC countries from raising their production capacity, which will undoubtedly lead to extending the life of their oil fields. These skeptics are demanding the main countries in OPEC to raise their oil production by 2 million barrels per day which will (according to them) reduce the prices below $70 a barrel. According to their argument, this price will remove the shale oil from the world oil production map since it will be less than the average cost of this type of unconventional oil. They claim that raising production will lead to lower prices without a negative impact on the income of the major producing countries in OPEC due to increasing the amount of sold oil compared to the quantities sold now. But they forget the pressure that this removal of such quantity of oil can induce to OPEC major countries, particularly the Gulf states. To make up this shortage if shale oil is removed from the global oil map, GCC countries have to invest hundreds of billions of dollars to develop new fields and/or increase the depletion rate of their existing fields. The positive thing here is the solid and firm position of OPEC in implementing its successful strategy, as an indication of its commitment toward the oil markets stability required to protect the global economic recovery and secure the oil supplies. OPEC also continues implementing its current strategy towards the shale oil evolution by monitoring the development of this high cost oil to further assess its potential threat in the long term. Currently shale oil is being looked at complementing the conventional oil. In the worst scenario, OPEC countries in the long term will either find new markets for its oil if the need arises or further use this spared quantity in expanding its oil integrated industry (Refining, Petrochemicals, and Product Manufacturing). This will definitely help these countries to diversify their sources of income, improve their economies and reduce unemployment. I herby ask OPEC to stay firm on their strategy and I also ask these voices to redirect their efforts to demand diversifying the income sources of their countries. — Dr. Sami Alnuaim is a Saudi writer. He can be reached at www.saudienergy.net and followed on Twitter@neaimsa
