As predicted in previous blogs, the Gulf nations agreed to oppose any cut to OPEC production despite the falling oil prices per barrel. As reported on 10/16/14, these members of the Organization of the Petroleum Exporting Countries do not want to lose any share in global oil markets. The next meeting is in Vienna on 11/27/14. The final analysis is that the drop in oil prices to $70 will economically prevent any additional production of US shale oil production.

In reviewing this strategy, the Gulf oil producers have assumed a certain level of breakeven point for non-OPEC oil producers. This premise appears to be short lived since this group in heavily investing in research and development and developing ways of reducing cost. Even with the estimate $10 per barrel cost for Gulf nation oil producers, the overall country infrastructure will put pressure on costs. By implementing Lean Six Sigma training and initiatives, competing on cost will allow for the Gulf oil producers can maintain their dominance in this market.

Article Link: http://www.marketwatch.com/story/saudis-other-gulf-states-to-oppose-opec-output-cuts-2014-10-16

Gary Kapanowski – Lean Six Sigma Master Black Belt – Excelsior

The following blog is the opinion of Gary Kapanowski and Garykapanowski.com. It is the sole intent to broadcast this opinion from Gary Kapanowski and Garykapanowski.com exclusively and not to reflect on any other institutions or organizations associated with Gary Kapanowski or Garykapanowski.com.

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