OPEC Is Having an Impact on U.S. Oil Output

OPEC Is Having an Impact on U.S. Oil Output
OPEC Is Having an Impact on U.S. Oil Output

OPEC’s strategy of flooding the market with oil in order to regain market share seems to be working, although at great cost. The cartel’s decision in November 2014 to increase production has driven down U.S. oil production to its former levels. U.S. crude production has retreated about 500,000 barrels a day from the three-decade peak reached in June to 9.1 million a day in the week to Oct. 9, according to data from the Energy Information Administration. The decision has come at great cost to OPEC members. Saudi Arabia will register a 20 percent budget deficit this year despite efforts to cut back spending. At this rate, its foreign currency reserves will only last five years. Other OPEC nations are in worse shape. THe “Fragile Five” – Venezuela, Libya, Algeria, Iraq and Nigeria – have lost huge amounts of revenue and are facing political unrest. Iran has asked OPEC to cut back but is planning to put its own million barrels a day on the market as soon as the sanctions are swept away. Analysts are predicting a long, long period in which oil prices remain depressed across the world.

http://www.bloomberg.com/news/articles/2015-10-20/after-year-of-pain-opec-close-to-halting-u-s-oil-in-its-tracks

Comment
Show commentsHide Comments

Related Articles