OPEC battling ‘diminishing influence’: analyst

shale-rigsBY refusing to limit oil production in the face of plummeting prices, OPEC is successfully combating its “diminishing influence”, according to a leading research and consulting firm.

GlobalData head of oil & gas research and consulting Matthew Jurecky said more than 70 per cent of the 12.7 million barrels of oil per day incremental production between 2008 and 2013 had come from non-OPEC countries, led by the US, Russia and China.

However, plummeting prices – more than 50 per cent in less than six months – were now slowing production growth among those producers with the highest costs.

Mr Jurecky said the market dominance of the most efficient producers, predominantly OPEC members, was now being reinstated.

“Any production cut from OPEC would be motivated by politics rather than economic conditions and would mean voluntarily ceding further market share to less efficient producers,” Mr Jurecky said.

In response, the US was looking to reverse a 40-year old oil export ban, which effectively protected OPEC’s markets, as the Obama Administration encouraged more domestic shale investment to offset the effects of low prices.

OPEC secretary general Abdalla Salem el-Badri has refuted claims that OPEC was targeting US shale producers, and told Bloomberg Business that production levels were “purely an economic decision”.