OPEC versus Shale Oil. The final battle

A war, at times sordid and at times open, has been developing in the oil market. On the one hand OPEC and its allies led by Russia, and on the other, the production of shale oil in the United States. While the OPEC countries make great efforts to reduce stocks and push prices, in the United States, producers are advancing with drilling and have placed the country in a real oil revolution that has overshadowed countries like Saudi Arabia. Now, with international oil prices rising and a loss of momentum on the part of American producers, the end of that war could come.

OPEC PREPARES TO REGAIN CONTROL

This week there will be a key meeting. In Vienna, the member countries of OPEC and their allies, led by Russia, will meet with the intention of expanding, again, the cuts in world oil production.

After the decision of cuts adopted by a similar meeting a year ago, the results have begun to show. The excess in inventories held by the most developed countries has begun to fall. Currently, surpluses are located at 140 million barrels, after a reduction of 183 million barrels.

The international price of crude reached its highest level in two years, when it marked 64.65 dollars per barrel in slates.

For those who had anticipated a loss of political power from OPEC, the cartel has motorized agreements that have returned its role as arbiter in the world oil market.

THE GREAT YEAR OF SHALE OIL IN THE UNITED STATES

It is undeniable that the production of shale oil, in the United States, has caused a true revolution in the market and in the main world economy. The production of unconventional oil - as is often called shale oil - has placed the United States among the world's leading producers. A country that, until very recently, suffered from dependence on international producers.

However, with crude oil prices raised, drilling companies that explore and exploit deposits in the areas of Texas and North Dakota have been losing steam. It is likely that investors in the shale oil business have intimidated producers to take a break in reinvesting profits in new drilling and give way to the collection of profits.

Shale oil production is on a plateau from the month of July. But, producers in the United States are crouched to go to a new stage of drilling.

VICIOUS CIRCLE

While the efforts of OPEC and its allies to reduce surplus inventories have pushed oil prices, this increase in the value of the barrel becomes, in turn, a stimulus for shale oil producers.

The underlying problem is that a new impulse to the production of unconventional oil could return the inventories to the levels of previous surpluses and this would undermine the world prices of the barrel.

The battle between OPEC and shale oil producers could come to an end. But, until now, that ending is open. OPEC knows that shale oil reserves are sufficient to question its leadership in the global market.