Stopping the Pump: Oil Producers Fighting Low Prices
- Oil producers are trying to prevent prices from falling $85 again
- Upstart shale oil production in the U.S. is north of 10 million barrels
OPEC (The Organization of the Oil Producing Countries) and U.S. shale oil producers recently had their second round of talks to discuss oil production outlooks. Will they figure out a way to work together and keep oil prices at a sustainable level?
Why This Matters: Several African countries are dependent on the health of the energy market to help stabilize their economies. For example, the $85 drop in oil prices between 2014 and 2015 sent Nigeria into a recession. This caused OPEC countries to step in and to lower their oil production in efforts to stabilize oil prices.
Now that the price of oil is above $60, shale producers are ramping up drilling again. It’s not clear what the prospects are for cooperation between OPEC and shale producers to prevent another oil price collapse. Investors have told shale oil producers to pay more attention to figuring out profits rather than just pumping out more oil.
Situational Awareness: In the wake of the slump in oil prices, investment in the oil industry has dropped more than $1 trillion. Industry stakeholders worry there could be a global energy crisis. “If the trend of the last two or three years continue, and God forbid, we will be sowing seeds for a future global energy crisis that nobody wants to see,” said Mohammed Barkindo, OPEC Secretary General.
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