OPEC states have lost control of the market for oil
Wall Street Journal:
...This is consistent with what I have been saying for awhile. The cost of production of US shale has put a ceiling on the price OPEC can demand for its oil.
When Saudi Arabia and others made the strategic decision in 2014 to increase oil production and defend their share of the global market, they probably assumed that the resulting lower prices—and diminished national revenue—would be temporary. Two years later, with oil prices still around $50 a barrel, it’s no longer business as usual. In Venezuela, people are going hungry. In Saudi Arabia, the state is cutting back workers’ benefits. These are dangerous times to be the leader of a petrostate.
So OPEC members have in effect admitted defeat by announcing a desire to cut production—the first of what could become many attempts to balance the market. But they may not get the increased prices that they need. If a West Texas engineer can complete new wells profitably at today’s prices—and many already can—then American producers will react to an uptick by turning on their supply, which will act as a brake on prices. This isn’t a short-term change: RS Energy Group estimates that there are 155 billion barrels of U.S. shale oil in the ground that can be economically produced at prices below $60 apiece.