Me, "Even though this article is 2 years old its got a lot of good facts on how OPEC has been trying to influence oil production and price around the world. With OPEC recently tightening production, the price of Oil per barrel may rise and we may see Oil Fracking make a comeback. In Texas, where recently a big field for fracking was discovered and North Dakota where they are trying to build pipelines to get oil to refineries and instead are angering Native Americans; oil Fracking may once again take off and it is all due to OPEC. The irony here is that OPEC was trying to kill off Oil Fracking and its companies for the last few years, making it uneconomical to produce oil from and it just became too costly for OPEC to continue doing."
From article, "Oil prices keep plummeting as OPEC starts a price war with the US"
(...as oil prices increased, many energy companies suddenly found it profitable to start extracting oil from difficult-to-drill places. In the United States, companies began using techniques like fracking and horizontal drilling to extract oil from shale formations in North Dakota and Texas.
That led to a boom in "tight oil" production, as the US has added about 4 million new barrels of crude oil per day to the global market since 2008. (Global production is about 75 million barrels per day, so this is a significant number.)
Up until very recently, however, that US oil boom — along with increases in Canada and Russia — had a fairly minimal effect on global prices. That's because, at the exact same time, geopolitical conflicts were flaring up in key oil regions. There was a civil war in Libya. Iraq was a mess. The US and Europe slapped oil sanctions on Iran and pinched that country's exports. Those conflicts took more than 3 million barrels per day off the market.
Things changed again around September 2014. Many of those disruptions started easing. Libya's oil industry began pumping out lots of crude again. And even more significantly, oil demand in Asia and Europe has been weakening — particularly in places like China, Japan, and Germany.
The combination of weaker demand and rising supply caused oil prices to start dropping from their June peak of $115 per barrel down to around $80 per barrel by mid-November. Oil is still much pricier than it was a decade ago (when it was still around $40 per barrel). But it's dropping for now.
At its big meeting in Vienna on November 27, there was a lot of heated debate among OPEC members about how best to respond to this current drop in oil prices. Some countries, like Venezuela and Iran, wanted the cartel (mainly Saudi Arabia) to cut back on production in order to prop up the price of oil. The reason is that these countries need high prices in order to "break even" on their budgets and pay for all the government spending they've racked up:
for all intents and purposes, OPEC is now engaged in a "price war" with the United States. What that means is that it's very cheap to pump oil out of places like Saudi Arabia and Kuwait. But it's more expensive to extract oil from shale formations in places like Texas and North Dakota. So as the price of oil keeps falling, some US producers may become unprofitable and go out of business. The result? Oil prices will stabilize and OPEC maintains its market share.
The catch is that no one quite knows how low prices need to go to curb the US shale boom.)
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