From Forbes
OPEC announced Thursday that it would extend its 1.8 million bpd of oil production cuts, started last December, until the second quarter of 2018. The decision was a foregone conclusion, a continuation of the strategy agreed to in their November meeting — which clearly hasn’t yet worked. Oil prices are lower now than at the beginning of the year, while American oil is booming again.
Already since that November OPEC meeting, U.S. oil production has surged by 600,000 bpd. That’s a growth rate of 100,000 bpd per month — which analysts expect to continue, boosting U.S. oil output to 9.9 million bpd by the end of the year. It would be an all-time high. Given another year, the Americans could eat up all of OPEC’s cuts.
Important ministers like Saudi’s Khalid al-Falih played it even calmer than usual, trying not to look worried. “We will be very gentle in our approach so we do not shock the market,” he reportedly said Thursday. But the market is in shock. Not shocked at OPEC. Shocked at American oil supply.
