Production Cuts vs Innovation – Why OPEC Has Lost The Oil Price War

10 May 2017   OPEC

OPEC and its cartel of friends must be sweating condensates in advance of their May 25th meeting. The oil price war, triggered almost three years ago, is far from over. Calling a truce with production cuts has been an ineffective strategy. In fact, it’s been a feeble strategy and nobody in the business should rely on its extension to be effective. Price wars are often triggered by the arrival of a new entrant into an entrenched market clique. American light tight oil began flowing into petroleum supply chains in 2010. By 2014, output from plays like the Bakken, Eagle Ford and Permian had penetrated 4 percent of the world’s oil market, antagonizing starched interests in the industry. There is a standard script for price wars that is played out in many businesses, not just oil. Airlines, pizza parlours and makers of high-tech equipment know the story line well. Act […]

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