The Role of Shale Oil Production in Reshaping the Trends of Global Oil Supply and Demand

Abstract

Since 2012, the level of shale oil has increased, especially in the fields of the United States of America, which has increased the glut in oil supply in the markets and increased the state of reassurance, of consumers, thus reducing the level of withdrawals on crude oil. This forced producers from both OPEC and outside of it to reconsider production levels multiple times, in order to defeat the companies investing in shale oil.

But technical developments led to a reduction in the cost of producing shale oil, making its production economically rewarding, which increased the ability of shale oil producers to compete.

This led to the United States moving from being consumers to being self-sufficient, and it has even been on top of oil producers during the past few years and forcing exporters to search for other markets, which led to their competition for Asian markets and expanded the options of oil-consuming countries such as China, India, Korea, and Japan, and this  increased production led to  reduce the level of oil demand and increased the level of oil glut, thus increasing the oil supply.

This situation reduced the level of demand and, as a result, reduced the level of oil prices and became a restriction on the rise in prices again, such that it would be between (50 thousand dollars to 70 thousand dollars)

and since most of the oil-producing countries depend completely on oil (rentierism), this will lead to the decline of their economies, which will lead to security instability.

Besides reducing development opportunities for these countries, their debt will rise, forcing them to borrow from foreign financial institutions. This measure will lead to mortgaging their sovereignty due to the conditions and restrictions that will be set by the Borrowing Countries Fund, which will lead to mortgaging the independence of their administrative decision and mortgaging their sovereignty.

Lower prices will lead to an increase in the level of growth in oil-consuming countries, and the level of well-being of their people will increase, and such a situation will increase their income levels, and this will lead to an increase in the level of oil consumption again, so its prices will rise in the future, and thus a new cycle of oil prices will be formed.