OPEC, shale oil, falling oil prices

According to the UAE it is not possible for OPEC alone to reverse falling oil prices, the output of shale oil also needs to be curbed as well according to the United Arab Emirates. Is this just sour grapes though? Shale oil has helped to bring oil prices down, but in the past OPEC could set costs and cause increases without any help. That is no longer true today as the world moves away from oil dependence on the volatile Middle East and towards alternatives like shale oil. According to Suhail al-Mazrouei, the UAE Energy Minister, “We cannot continue to be protecting a certain price. We have seen the oversupply, coming primarily from shale oil, and that needed to be corrected.” Not everyone shares this view though.

While OPEC may blame falling oil prices on shale oil the group did not lower their production from 30 million barrels a day during the November 2014 meeting, in the hopes that the lower prices would force the producers of shale oil to go under. Mazrouei said “We are telling the market and other producers to be rational, to be like OPEC and look at growth in the market.” Crude oil has fallen below $50 a barrel in some markets, and that has many in the Middle East looking at falling revenues. Right now oil is at the lowest point since 2009, 6 years ago. For drivers the falling oil prices are seen as a welcome relief though, with gas in some parts of the USA below $2 a gallon for the first time in a long time.