OPEC no longer rules supreme. America now produces more oil than Saudi Arabia....but for how long?

OPEC no longer rules supreme. America now produces more oil than Saudi Arabia....but for how long?

OPEC, the cartel which controls 40% of world oil output, met in Vienna today.

It faces a dilemma. OPEC’s poorer members, whose oil is generally costly to extract, want to cut output to prop up prices—now at four-year lows. Richer ones, who have lower costs, prefer to keep pumping and maintain their market share. OPEC no longer rules supreme: America now produces more oil than Saudi Arabia, and other non-members such as Russia and Mexico sometimes gain from OPEC’s decisions. A failure to agree on output cuts will send the price tumbling further.

OPEC Leaves Production Target Unchanged.

VIENNA—OPEC members agreed on Thursday to stick to the oil-producer group’s existing output target—a move that would require modest cuts in production but which stops well short of the stronger action some members had called for to bolster prices.

The oil producer group’s decision led to a further sharp selloff in major global oil benchmarks, with U.S. markets closed for the Thanksgiving holiday. 

Brent crude fell about 6% to below $73, a four-year low, while the West Texas Intermediate benchmark was down 3.2% to $71.36 a barrel.

Currencies of countries that are major oil producers slid, with the Canadian dollar down 0.4% against the U.S. dollar and the Russian ruble off 0.4% against the euro. 

Share prices of major oil companies also fell, with Royal Dutch Shell PLC down 3%, Total SA off 2.9% and BP falling 2%.


Shale oil is obtained through the costly technical process known as fracking, which Leschus said only becomes profitable when the price lies above $80 or $90 per barrel. Hmmmm.....The Arabs will play it hard, US Shale gas and Canadian oil sands need a higher Oil price to be sustainable, so expect higher prices.