Prices independence), a record volume of worldwide

Prices
were stable between 2011 and mid-2014.

At the same time, US oil
production nearly doubled from 2008 levels and approached the world-leading
volumes of Saudi Arabia and Russia, due to the substantial long-term
improvement and spread of shale “fracking”
technology in response to the years of record oil prices. These developments
led in turn to a plunge in US oil import requirements (moving closer to energy
independence), a record volume of
worldwide oil inventories, and a collapse in oil prices that continued into early
2016.

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In spite of global
oversupply, on 27 November 2014 in Vienna, Saudi Oil Minister Ali
Al-Naimi

A year later, when OPEC met
in Vienna on 4 December 2015, the organization had exceeded its production
ceiling for 18 consecutive months, US oil production had declined only slightly
from its peak, world markets appeared to be oversupplied by at least 2 million
barrels per day despite war-torn Libya pumping 1 million barrels below
capacity, oil producers were making major adjustments to withstand prices as
low as the $40s. hundreds of world leaders at the Paris Climate
Agreement were committing to limit
carbon emissions from fossil fuels, and solar technologies were
becoming steadily more competitive and prevalent.

In light of all these market
pressures, OPEC decided to set aside its ineffective production ceiling until
the next ministerial conference in June 2016.

As 2016 continued, the oil
glut was partially trimmed with significant production offline in the US,
Canada, Libya, Nigeria and China, and the basket price gradually rose back into
the $40s. OPEC regained a modest percentage of market share, saw the
cancellation of many competing drilling projects, maintained the status quo at
its June conference, and endorsed “prices at levels that are suitable for
both producers and consumers”, although many producers were still
experiencing serious economic difficulties.

 

In 2017, As OPEC members grew
weary of a multi-year supply contest with diminishing returns and shrinking financial reserves, the organization
finally attempted its first production cut since 2008.

The agreement covered
the first half of 2017. Starting January 2017, it will produce 32.5 million
barrels per day. Indonesia announced another “temporary suspension”
of its OPEC membership, rather than accepting the organization’s requested 5
percent production cut. Russia, not an
OPEC member, voluntarily agreed to cut
production. OPEC was struggling to
maintain market share. Its share fell from 44.5 percent in 2012 to 41.8 percent
in 2014. That’s because of a 16 percent increase in U.S. shale oil production. As the oil supply rose, prices fell from $108.54
in April 2012 to $34.72 in December 2015. That was one of the biggest
drops in oil price history.
OPEC waited to cut oil production because it didn’t want to see its market share drop
further. It produces oil more cheaply than its U.S. competition. The cartel
toughed it out until many of the shale companies went bankrupt.

Saudi Arabia especially
began producing at record levels in an attempt to bring prices down to a level
that would make higher-cost U.S. shale production unprofitable. U.S. shale
production did indeed drop, however, the slowdown in China hit demand bringing
prices down more than had been anticipated finally bottoming out at a 14-year low of USD 22.5 per barrel in January of 2016

Prices fluctuated
around US$50/bbl, and OPEC in May 2017 decided to extend the new quotas through
March 2018, with the world waiting to see if and how the oil inventory glut
might be fully siphoned-off by then. In December 2017, Russia and OPEC agreed
to extend the production cut of 1.8million barrels/day until the end of 2018.

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