Oil Prices Fall in Global Markets After OPEC Production Ceiling Stabilization

The Organization of the Petroleum Exporting Countries (OPEC) maintained its daily production ceiling of 30 million barrels during its meeting on Thursday, December 6, despite falling global oil prices and excess reserves. According to Reuters, oil prices in global markets dropped by up to six dollars per barrel on Thursday following OPEC's decision, marking the worst single-day drop since 2011. The report adds that Brent crude oil prices for future delivery fell by four dollars and 75 cents per barrel, reaching 73 dollars at 4 PM GMT. Initially, prices had dropped by six dollars, hitting 71 dollars and 25 cents. U.S. crude oil also fell by four dollars and 79 cents to 68 dollars and 90 cents, the lowest since May 2010. The decision made during OPEC's meeting was predictable, with countries like Saudi Arabia and the UAE emphasizing the need to maintain the production ceiling. Saudi Arabia is the largest producer among the 12 OPEC member countries and has significant influence over the organization's decision-making. Some OPEC countries affected by low oil prices called for production cuts. The desire of major oil-exporting countries to maintain their production ceiling, along with increased shale oil production in the U.S., has contributed to price declines in recent months. OPEC controls one-third of global oil sales, but a 32% drop in prices could exacerbate tensions among member countries. Analysts suggest that Saudi Arabia, by opposing production cuts, hopes to raise oil prices to a level that makes shale oil production viable. According to the Associated Press, this action theoretically would make shale oil production, particularly in the U.S., unprofitable, allowing OPEC to regain its dominant role in the oil market. Analysts state that shale oil production currently costs about 60 dollars per barrel. This means that if Saudi Arabia's theory holds, consumers will benefit in the short term, while OPEC could once again raise prices in the long term. OPEC has recently announced that the oil market will face a surplus of one million barrels per day in the first half of next year.