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    OPEC: The Paper Tiger Has Roared

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    Ending years of inaction the Organization of Petroleum Exporting Countries has brushed off her image as a defunct body finally agreeing on oil production cuts for the first time since 2008 crisis, but analysts say that this will also embolden the US' fracking industry.

    In an article titled "Leaner and meaner: US shale greater threat to OPEC after oil price war", written by Catherine Ngai and Ernest Scheyder for Reuters, the journalists reminded readers that:

    "In shale fields from Texas to North Dakota, production costs have roughly halved since 2014, when Saudi Arabia signaled an output free-for-all in an attempt to drive higher-cost shale producers out of the market. Rather than killing the US shale industry, the ensuing two-year price war made shale a stronger rival, even in the current low-price environment."

    They also include in their report that:

    "For OPEC ministers meeting in Vienna on Wednesday, a major concern is that an output cut would encourage a quick response from US shale producers, who have slashed costs and have been steadily adding drilling rigs."

    To highlight this point, the journalists then quote Michael Tran, director of the energy strategy at RBC Capital Markets in New York, who added that: "Right now, OPEC understands we're in a push-and-pull experiment with the United States. Two years ago, we thought prices hovering around $50 to $60 meant that non-OPEC production growth would end. But U.S. production came back stronger."

    Boris Volkhonsky, Head of the Asian Desk at the Russian Institute of Strategic Studies (studio guest), Justin Dargin, Middle East Energy Expert at the University of Oxford, Vladimir Mikheev, Troika report project with RBTH, and Sergei Suverov, Head of Research, Broker Credit Service, Asset Management Company joined us to discuss the issue.

    We'd love to get your feedback at radio@sputniknews.com.

    Tags:
    Oil, oil prices, OPEC
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