In November 2014, during the first OPEC summit after the the oil market crash, the cartel abstained from cutting its oil production by leaving the daily quotas unchanged at 30 million barrels a day.
At this point, most experts say that OPEC unofficially run by Saudi Arabia did it on purpose in order to oust various shale-oil companies. Even this summer, despite suffering big losses from oil export at ultra-low prices, OPEC decided to pursue the same strategy of abundant oil production, which has been leading to constantly expanding oversupply in the global market of crude oil, which presses the prices even harder.
Masterforex-V Academy reports that most representatives of he international expert community are almost sure that the same scenario is going to manifest itself once again. Major hedge funds keep on betting on lower oil prices as Iran is announcing its plans to expand its oil production, which is doomed to expert extra downward pressure on oil prices.
They are sure that nothing is going to change without Saudi Arabia’s consent even if OPEC’s majority backs production cuts since Saudi Arabia is the cartel’s leader. It is hard to imagine the conditions under which OPEC is going to compromise and cut its oil production.
At this point, it seems like OPEC’s efforts to expand its market share by ousting shale companies start paying off. The thing is that U.S. shale companies shut down their rigs and reduce investments. The total investment in shale oil production made by 61 American shale companies decreased by 40 billion dollars over the period of January through September 2015.
Last week, the amount of shale oil rigs in the USA decreased by 9 more units down to 555 units. For the sake of comparison, 12 months before, there were 1572 rigs operating in the USA.
