It's OPEC against OPEC!

Summary

OPEC's greatest competitor is now OPEC.

The real reason OPEC oil production levels will remain high.

What the market is transitioning into.

Is a real free market oil industry emerging?


There are a lot of variables behind the reason the price of oil has plunged, as producers ramp up production in an attempt to maintain market share.

When Saudi Arabia and OPEC decided to boost production in response to the serious threat of U.S. shale oil, that was the primary impetus behind pushing prices down, in order to put extreme pressure on the quickly-growing shale competitors before they were too big to be dealt with.

As time as passed though, and U.S. producers have been forced to lower production levels and reduce exploration and development spending, a scenario has emerged that has gravitated to OPEC itself.

With Iran about to be released from sanctions, it has aggressively and publicly stated it will take steps to gain back market share it has lost, and will do what's best for the country, which was a reference to ignoring anything Saudi Arabia had to say about it.

This is one of the reasons the latest OPEC meeting was meaningless, as it was already known by those that really follow the industry and understand what's going on, that there was no chance of an agreement being reached on production cuts. It's doubtful it was even a serious part of the conversation, if it was brought up at all.

more on OPEC's internal competition