The final reason is the United States’ staggering amount of tight shale oil production. Right now, the Saudis think they’re pressuring U.S. producers to limit production. But that’s simply not the case.
“Keeping prices low only has an indirect effect on global oil prices,” Moors said. “OPEC can only impact the American market by what it exports there, and only in that way does it have any effect on world pricing.
“There is a straightforward reason for this. U.S. producers are still prohibited from exporting most types of crude. Unfortunately for the Saudis, that is about to change, creating very direct consequences on broader pricing from U.S. production.
“There are now plenty of excess recoverable reserves in the United States. So exporting would have no effect on already declining prices in the domestic market. That removes the primary political objection to U.S. exports.”
And exporting oil would be a major stimulus for the United States for the foreseeable future.
“So as we head into 2015, OPEC has revealed its cards and they aren’t playing a winning hand,” Moors said.
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