The past week has been a good one for OPEC. The cartel trumpeted its oil production cuts on Wednesday, saying that it had made 90 per cent of the promised cuts and that non-OPEC members had made 60 per cent.
This is borderline shocking given that the Organization of Petroleum Exporting Countries is well known for cheating its own quotas. There are estimates that around 1.2 million barrels per day of production has been cut from world supply as a result of this deal, and it has had the desired effect, with oil prices rising to above $54 US in North America.
U.S. producers are taking full advantage of the uptick. American production last week topped nine million barrels a day for the first time in 10 months, up a half million barrels per day since September.
And that really sums up the tug of war between the U.S and the oil cartel. It shows that OPEC doesn’t really control the oil market any more.
“The last week OPEC has been successful at boosting market psychology and boosting confidence that their cuts will have an impact on the supply glut,” said Jim Burkhard, head of global oil markets research with IHS Energy.
“But with every OPEC action, there is a reaction. It may take time, but in the months ahead the reaction will be growth in U.S. oil production.”
Saudi oil privatization move
OPEC, for its part, has a lot at stake with these cuts, but there are questions about how far it will go to goose prices.
Saudi Arabia is taking its state-owned oil…