Shale oil gas not a threat to Gulf oil

Abu Dhabi: Despite the increasing productivity of shale oil in the US, market analysts said it was not a threat to Gulf oil production.

“I think [shale oil production] will grow. I think shale oil and gas production is important for the US and for the US industry. I don’t expect it to have a major bearing on the global energy market,” said Chief Economist for Middle East & North Africa at HSBC, Simon Williams.

Abdullah Al Badri, Secretary General at the Organisation of the Petroleum Exporting Countries (Opec), earlier confirmed Opec could accommodate the US’ shale productivity, which was reported at 2.7 million barrels per day and set to grow.

With average prices of crude oil reaching $108 per barrel during 2013, analysts expect a drop in prices during 2014 mainly due to increased oil supply.

Along with increased supply from Opec, which the UAE is part of, one of the factors accounting for the growth in oil supply is the shale oil boom in the United States.

In fact, a recent report by the US Energy Information Administration predicts a gradual drop in prices that will average $104 per barrel during 2014.

However, looking into the UAE oil market, experts believe production will remain flat, and do not see an impact from the drop in price.

“It won’t have a major bearing; whether oil is at $100 or $120 a barrel, doesn’t make that much difference. Oil revenues only seep through into the domestic economy when spending increases. I don’t think [changes in] oil prices will have an impact on spending plans,” HSBC’s Williams said.

Indeed, Opec was positive about the outlook for the oil market during 2014.

“Although world oil demand is forecast to increase during 2014, this will be more than offset by the projected increase in non-Opec supply,” Opec announced earlier this month.