The OPEC is controlling crude oil exports to stabilise the global oil market, keep oil prices high but the U.S., with eyes on lower oil prices is pumping more oil into the market, in a delicate balancing act, they both maintain the market.
“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” Donald Trump, president of the United States of America had said Feb. 25 on his verified Twitter handle.
Oil prices trend analysis shows dramatic fall from a high of around $114 per barrel in June 2014 to a low of around $27 a barrel in January 2016, correlating with a sharp imbalance in supply and demand.
This 76 percent fall in prices was attributed to weaker global demand and a supply glut brought by U.S. shale producers, who were causing a ‘shale revolution’, which made the U.S. world’s largest oil producers. Saudi Arabia and Russia had also contributed the oversupply.
Benchmark Brent crude traded at $65.07 at 12.05 GMT on Saturday, down by $1.24 and West Texas Intermediate traded at $55.80, shedding $1.42.
“Without this shale revolution we’ve seen in the U.S. the world would have been in major, major energy chaos,” Mohammad Barkindo, secretary general of OPEC told CNBC in Riyadh on Feb. 27.
Falling oil prices soon started taking tolls on producing nations especially in the U.S., whose producers have higher production costs.
The Organisation of Petroleum Exporting Countries’ members and a group of non-OPEC producers led by Russia agreed in late 2016 to curb their output in a bid to balance supply and demand, and prices, in an alliance now known as “OPEC Plus.”
“The decisions that OPEC took, together with our non-OPEC partners, literally rescued this industry from total collapse” Barkindo said.
Experts have said OPEC’s moderating role has allowed the U.S. oil sector to achieve record oil production and has made America a major energy exporter — something that seemed impossible less than a decade ago. More often than not in recent years, the cartel has succeeded in keeping the price of oil just high enough to spur investment in new shale fields, but low enough to keep consumers happy.
But President Trump has in several tweets cajoled and pleaded with the Cartel to increase supplies and lower oil prices. And in a recent move, the U.S. House Judiciary Committee passed the No Oil Producing and Exporting Cartels Act, commonly known as NOPEC, clearing the bill for a vote before the full House of Representatives.
The bills would essentially make it illegal for foreign nations to work together to limit fossil fuel supplies and set prices. They would authorise the U.S. Justice Department to sue oil producers for antitrust violations by stripping foreign actors of sovereign immunity protections.
“What may not be understood in the marble halls of Congress is that OPEC, particularly Saudi Arabia, Kuwait, Iraq and the United Arab Emirates, hold the lowest-cost oil reserves in the world” Dan K. Eberhart, CEO of Canary, an independent oilfield services company in the United States.
A similar bill was first introduced in 2000, and Congress has revived it several times since then. It was most recently revived in the last Congress, where it stalled after getting House Judiciary Committee approval. The full House and Senate passed NOPEC legislation in 2007. The House passed it again in 2008; the same year oil prices hit an all-time high at nearly $150 a barrel.
However, the bill languished under threat of veto from former President George W. Bush. Former President Barack Obama also opposed NOPEC, but analysts have speculated the measure could find support in the Trump White House