The Global Shakeout From Plunging Oil
New supply—rather than demand—is dominating the market, and OPEC has been caught by surprise.
By Daniel Yergin
1. Thanks to fracking, we see a huge new supply of oil and natural gas being opened up all over the USA. And that means we could have a vastly better balance of trade since we will be importing a lot less oil from OPEC countries.
2. China's recent gigantic deal from Russia to build pipelines into Siberia to import crude oil and natural gas means China will end up being way less dependent on OPEC countries.
3. Europe--likely heading into a recession again--will mean lower demand for oil from the Middle East.
In short, OPEC is facing a huge dilemma: they may lose their two of their biggest customers and Europe falling into a recession will lower demand for OPEC oil. We're about to end up with a huge glut of petroleum products.