https://www.telegraph.co.uk/business/2019/01/25
The oil alliance of Opec and Russia has abandoned efforts to drive US shale out of the global energy market, accepting the hard reality of America’s irrepressible frackers for years to come.
“To really fight shale we’d need oil below $40 a barrel,” said Kirill Dmitriev, head of Russia’s wealth fund.
“That is not good for the Russian economy and it is not good for the Saudi economy. It is not practical, and we are not going to try to fight it,” he told the World Economic Forum in Davos.
A string of Opec members would risk incipient insolvency if there were another oil price war along the lines of 2014-2016. Saudi Arabia’s ruling dynasty would struggle to maintain its cradle-to-grave welfare model needed to head off political dissent.
Mr Dmitriev, a key architect of Russia’s oil strategy, said his country was working tightly with the Opec cartel and was now pursuing prices of $60 to $70, deemed the optimal range needed to ensure long-term stability.
Brent crude has crept up into the bottom of this range after a dramatic sell-off in October and November on global recession fears and a soft US line on Iranian sanctions. The Opec-Russia deal last month to trim output by 800,000 barrels a day (b/d) has restored balance to the market.