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Created with Fabric.js 1.4.5 Why hasn't OPEC intervened? Those who would stand to benefit from lower production, via an OPEC intervention, would be Iran and Russia, which the Saudis, along with its Gulf allies, aren't biting at the bit to help out.Geopolitical Gains:1. Keeping prices low will provide an opportunity for Saudi Arabia to recapture the market that it lost to Iran and Russia.Saudi Arabia has the luxury of living with lower oilprices easily with its high reserves and low cost toget oil out of the ground.2. It hurts Russia. Low prices hurt its key asset, energy.Power:Sanctions against Russia, along with the near 50% dropin prices has severely affected Russia's economyThe EU and U.S. are considering additional sanctions againstRussia over its support for rebels in Ukraine. Thosesanctions include asset freezes, controls onfinancing, restrictions on access to capital markets,and controls on goods and services for the Russianmilitary.In the meantime, Chinese Prime Minister, Wang Yi, announced Beijing's willingness to "provide necessary assistance to back Russia. 3. It hurts Iran. Iran continues its support of al-Assad's regime in Syria. Where does the U.S. Shale Revolution Fit? In the short-term, IHS analysts see U.S. tight oil as the primary immediate supply response that would stabilize the market. "Besides sub-par demand growth, the defining elementof the present crude oil market is the record-setting pace of U.S. oil production growth in the last three years," according to a January IHS report. What are industry analysts saying? "While lower oil prices will cut the drastic increases seen in recent years, even if prices rise to just $50 - $60 per barrel through 2020, production will increase and then tapper to about the same volume as last year," Rusty Braziel, RBN Energy analyst, said. Braziel predicts increased drillingefficiency, falling production costs and great reliance on the most productive oil areas, boosting production despite investment cuts.David Knapp, Energy Intelligence, does not believe production will becut dramatically. Knapp's view is that record amounts of oil will be stored keeping prices low. He expects prices to fall to $35 per barrelby the end of the year rather than rebounding.
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