When Saudi Arabia, several years back, called upon the OPEC members it leads to ramp up their production activities, many observers were surprised by the overt nature of the move. While analysts had correctly predicted, for years, that OPEC would be forced to respond to booming shale oil and gas production in North America, some assumed that Saudi Arabia would err on the side of caution. Instead, the petro-giant seemed determined to plow full steam ahead in an effort to undermine the viability of as many shale producers as possible.
That thrust culminated in last year’s plunge on the global petroleum markets to about $20 per barrel. As a figure that had not been seen for quite some time beforehand, that new level surprised many once again. Just when some were getting used to the prospect of $20 petroleum and what it might mean for producers in the United States and Canada, though, a violent correction sent the price lurching back up. By the time it finally settled back around the $50 level that many have since become comfortable with, some had begun to assume that an era of apparent senselessness was finally coming to an end.
This is not to say, however, that every expert is confident the price of petroleum will remain steady, at least for long. In fact, many highly informed oil forecasts now predict a certain amount of price appreciation over the year to come. With what has become widely recognized as a true supply glut now seeming ready to be soaked up by steadily growing demand in Asia, quite a few experts figure that a further rise in the price of petroleum to $60 or more could well be expected.
How and to what extent that plays out will depend, to an extent, on the reactions of the same North American shale specialists who spurred Saudi Arabia and OPEC into action years back. With investment levels and interest in new projects having dampened throughout 2016, it remains to be seen to what extent these important influences will pick up should the price of petroleum rise a bit more. Should at least some portion of the potential American and Canada shale producers decide to remain on the sidelines, a bit more appreciation could well follow.