The investment bankers from Goldman Sachs have adjusted their price forecast for North American oil (WTI) in 2015 downwards by 18 percent to 74 US dollars per barrel. For weeks it has been speculated as to whether this development – particularly in the context of continuing unbridled oil production in Saudi Arabia – is backed by further market- or geopolitical strategic concerns, namely the battle to retain market shares or efforts to weaken the financial security of states like Russia, Venezuela or Iran that depend crucially on oil exports. Analysts quoted by the Frankfurter Allgemeine Zeitung (Nov. 29th) are nonetheless convinced that “it is becoming ever more clear that a price war is emerging on the international oil market between Saudi Arabia and American shale oil. The next meeting of OPEC, scheduled for the end of November, is thus awaited with much anticipation.”
The meaning of Goldman’s announced price forecast adjustment to 74 dollars per barrel becomes clear if one also recalls that the financial viability of shale oil exploitation through fracking in the US is tied to a price of between 75-78 dollars per barrel. At any lower price, production must be scaled back, which would in turn alter the contours of the whole debate over future US oil exports and the “shale boom” in general. In this context, it is hard to imagine those in Riyadh inclined to strictly separate markets and geopolitics in their thinking.