Last year, oil prices averaged US$45 per barrel but Brent Crude oil is now edging US$60pb.This is over double the price it was in spring 2016. The price is based upon global growth strengthening and an agreement between Russia and the OPEC oil producing nations to reduce production. This agreement, aimed at reducing oil over supply and ending the glut in oil, is now to be extended beyond March 2018. Although it has been successful in boosting the oil price, non OPEC counties outside the agreement could start increasing production encouraged by high prices.
One such country is the US. Its flourishing shale gas and oil facilities now account for 14% of the world’s production. Shale gas has been an agent for change in keeping production high and prices low. Shale production allows Texas to challenge Saudi Arabia as an oil producer and with this influence shale could keep the oil price within a range of US$40 –US$60pb.