Brenda Shaffer argues that the global oil price, often assumed to be driven by hidden government or cartel machinations, is actually set by ordinary supply and demand, traded globally at a single price and prone to volatility because production cannot be quickly adjusted.
She contends that OPEC has lost much of its historical power to move the market, having fallen from 60 percent of global output in the 1970s to about 40 percent by 2000 and now unable to act meaningfully without non-OPEC producers, whose rise she identifies as the key geopolitical shift behind the 2014-2015 price collapse.
Shaffer also examines how low oil prices shape related geopolitics, including Russia’s incentive to delay the Iran nuclear deal to keep Iranian oil off the market, and points to continued Chinese economic slowdown as a factor likely to keep pressuring prices downward.
