OPEC is in a defensive mode, losing ground to competition
Ed Morse, global head of commodities research at Citigroup, discusses OPEC and the United States’ role in global oil markets. He speaks on “Bloomberg Surveillance.”
He said today’s OPEC is much different than years’ past, and that it is in a defensive mode and will lose in the long run.
“The US has a much bigger role that before and the more oil prices go up, the more there will be oil in the market, not just US oil, but also oil from unconventional sources,” Morse said.
“The cost of producing new oil is well below the fiscal breakeven of these OPEC countries.”
He added that the hope is oil demand will be brisk, but the problem is that oil demand over the last 5 years has been coming from jet fuel, gasoline and petrochemical feedstock and not power generation any more.
“Oil has a monopoly in the transport sector but that sector is changing dramatically, facing more competition from gas and electric, and as such demand won’t be responding as OPEC is hoping.