11-06-2013, 07:01 AM
THE TAMING OF AN OIL CARTEL; A surge of oil from vast U.S. shale reserves was one thing. But now Russia, China and other countries are looking to the same technology to boost their own output, while Iraq's production is set to soar. It's a recipe for a flooded world oil market, and it's OPEC's biggest challenge yet
SHAWN McCARTHY, JEFFREY JONES
STAFF REUT AFP
2717 words
8 Jun 2013
The Globe and Mail
GLOB
English
©2013 The Globe and Mail Inc. All Rights Reserved.
OTTAWA and CALGARY -- OPEC ministers put on a brave face when pressed about one of a number of growing threats to the cartel's influence over world crude oil markets – surging shale oil production in the United States.
At OPEC's home base in Vienna last week, Saudi Arabia's powerful oil minister, Ali al-Naimi, played down the impact of the light, sweet crude that is gushing in record volumes from beneath North Dakota's bald prairie and the scrubby landscape of South Texas.
“This is not the first time new sources of oil are discovered, don't forget history,” he said. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”
Secretary-general Abdalla El-Badri was even more blunt: “OPEC will be around after shale oil finishes.”
Despite the bluster from the biggest names in the 12-nation group that supplies a third of the world's oil, however, it is clear the Organization of Petroleum Exporting Countries is getting nervous, and experts are questioning how long the cartel can act together to hold sway over global oil prices.
At the meeting, where the group kept its production ceiling of 30 million barrels a day, it also took the revealing step of forming a committee to study the impact of the hydraulic fracturing and horizontal drilling. The technology is propelling North America toward energy self-sufficiency and may spread to other countries with their own shale oil prospects.
“It is a great concern for us, even if we do respect the integrity of the U.S. to be self-sustainable in terms of oil and gas,” said Nigerian Oil Minister of Petroleum Resources Diezani Alison-Madueke, whose country is among the most affected in terms of the loss of exports to the United States.
More than 50 years after it was created to wrest economic power from the major oil companies, the OPEC oil cartel finds itself at risk of losing its dominant role in the global oil market. The group is increasingly competing with new oil sources that are starting to chip away at its share in previously secure markets, while a shaky global economy keeps demand for oil at bay. Also troubling for OPEC as it looks to protect oil prices: One key member, long-suffering Iraq, is aiming to dramatically increase production and flex its muscles again as a major exporter.
It adds up to a nightmare scenario for the group. China, Russia and other countries are taking early steps to emulate the North American unconventional oil boom of recent years, which has the U.S. on track to overtake Saudi Arabia as the world's largest oil producer. Some key OPEC members, meanwhile, are eager to pump as much as possible to bring in badly needed revenue, rather than restrain output as part of any concerted effort to add upward pressure to prices.
The risk is that such a scenario leads to cutthroat competition and a flood of oil in global markets, triggering a plunge in prices that could threaten the economic and political stability of its member nations.
“There's a storm brewing on the horizon,” said Greg Priddy, an analyst with Eurasia Group, a Washington-based political risk firm, “You are looking a year or two out before it becomes acute. But that is the direction we are headed.”
How Saudi Arabia and the rest of the fractious group cope with its external and internal threats will have ripple effects around the globe, from consumers ever sensitive to pump prices, to China's fast-growing industries, to Alberta's high-cost oil sands producers that need rich enough prices to justify new investment in their own vast reserves.
The coming ‘supply shock'
There is no question that OPEC still holds sway in the market. Traders from Singapore to New York to Calgary hang on every word its ministers utter as they enter and exit closed-door meetings, to gauge potential impacts on prices. The group's firm hand on its oil taps in the face of growing supplies from non-OPEC countries continues to influence international prices, which have remained around its $100 (U.S.) a barrel target.
Still, OPEC's world is changing.
“They are not at a pivot point yet, but there are clear challenges ahead,” said Daniel Yergin, vice-chairman of IHS Inc. and a leading consultant on the global oil industry.
“There are geopolitical challenges – regional challenges that come with the stand-off over Iran's nuclear program and the concerns Arab Gulf states have over it, and the Syrian conflict, which has elements of being a proxy war among countries that are key members of OPEC.
“And there is the buildup of supply coming from North America – in particular this dramatic increase, this surge, in U.S. oil production – and also the potential recovery of Iraq, [which is] very keen to make up for lost time.”
As recently as last year, OPEC members dismissed booming U.S. shale oil production as a flash in the pan. The formation of a study group to pore over the impacts shows the that thinking has changed.
It is no wonder. In its May Medium-Term Oil Market Report, the International Energy Agency referred to growth in U.S. light oil, along with the Canadian oil sands, as a “supply shock” that will be “as transformative to the market over the next five years as was the rise of Chinese demand over the last 15.”
Driven by the boom in oil production from regions such as the North Dakota Bakken and Eagle Ford in Texas, the United States is now on track to be the world's largest oil producer in the next decade, according to some forecasts.
The IEA, the West's energy watchdog, has predicted the United States will pump 11.1 million barrels a day by 2020, up from nearly seven million in 2012 and surpassing Saudi Arabia in the process. North Dakota production has more than doubled in two years to nearly 800,000 barrels a day. Already, after decades of promises, the shale revolution is helping the U.S. finally shake its “unhealthy addiction” to imported oil, as former president George W. Bush called it.
That alone will not strip OPEC of its overall market power. But cartel members such as Nigeria and Algeria that are known for producing light sweet crude – the easily flowing supplies that are low in sulphur content and simple to refine – are feeling the pinch.
U.S. imports from Nigeria were more than halved to 403,000 barrels a day in March, 2013, from 913,000 in March, 2011, according to the U.S. Energy Information Administration. Nigeria, Algeria and others have redirected exports to Asia and other markets amid expectations that the U.S. will eventually require no such supplies, said Michael Wittner, managing director and head of commodities research for Société Générale SA's Americas operations.
“Is OPEC relevant? As long as the shale oil is a North American thing, yes. That's something I would say will hold for maybe a five-year time horizon.,” Mr. Wittner said. “Out beyond that, the question becomes much more complicated.”
He points out that other countries, including Russia, China, Australia and Argentina, may have large shale oil reserves that could one day mean stiff new competition for the OPEC producers.
“As we move into unconventionals, OPEC is no longer going to hold all the cards,” said Thomas Pyle, president of the Institute for Energy Research in Washington.
Many in the U.S. see Canada and the proposal to build the Keystone XL pipeline to get increasing volumes of Alberta bitumen to the U.S. Gulf Coast as an important move in the geopolitical game.
“If the U.S. government got its act together and approved the Keystone pipeline, it would forge us a lasting relationship with Canada that would shift global energy power quite significantly,” Mr. Pyle said.
An immediate concern for OPEC due to falling light oil exports to the U.S. is increased competition with other crudes such as those from the North Sea and Russia, said Judith Dwarkin, director of research at ITG Investment Research.
“As the U.S. draws less on globally traded crudes, those crudes will then be looking for a home and that's where the pressure comes – competition among non-North American internationally traded crudes of which OPEC is a big part, but there are others,” Ms. Dwarkin said “So it's a somewhat more competitive environment in that sense.”
The Iraq factor
A thornier problem for OPEC is developing from within the family – Iraq.
Blessed with 20 per cent of the world's conventional reserves, it aims to boost its oil exports to seven million barrels a day from the current capacity of about three million. Even if it accomplished only half that, it would be a major source of additional production to a global market that OPEC says is already well supplied.
Unless economic growth rebounds smartly, OPEC members will have to cut production by as much as one million barrels a day over the next year, even as Iraq – backed by China, which already buys half its crude – looks to add 500,000 barrels a day each year. Failure by the cartel to respond would leave the world awash in crude, and threaten to send global prices sharply lower.
But Iraq remains deeply divided along sectarian lines. Sunnis, Shiite and Kurds are vying for power – often violently – in a country that has yet to stabilize after the U.S. invasion and occupation, and in a region where tensions have escalated with sanctions against Iran and the Syrian civil war in which OPEC heavyweights are backing competing sides. Political upheaval could thwart the best intentions of rebuilding Iraq's oil sector.
In addition, Saudi Arabia, which requires growing oil revenues to finance ambitious economic and social programs, will have limited patience for unrestrained production from Iraq, Mr. Yergin said.
“In any battle for market share, Saudi Arabia has the heft that no one else has,” he said. “If Iraq does continue to substantially grow, there are definitely limits to which the other Gulf countries – not just Saudi Arabia – are willing to make room to accommodate Iraqi supply. “ Since its founding in 1960, OPEC has faced numerous crises, including the Iranian revolution and Iran-Iraq war in 1979-80, a precipitous drop in world demand that pulled prices down to $9 a barrel in 1986, then the runup in 2008 to $148 a barrel, a price that threatened the world economy. Experts caution that today's pressures do not necessarily mean the cartel is in trouble.
“It depends what your definition of trouble is,” said Manoucher Takin, an analyst at the London-based Centre for Global Energy Studies, a group founded by former Saudi oil minister Sheik Ahmed Zaki Yamani. “Ever since OPEC was established, on many occasions, OPEC has been said to be in trouble. But it is still here.”
Mr. Takin said OPEC ministers are reluctant to act in the market based on forecasts of things such as shale oil production, but wait until actual conditions warrant a new strategy. At this point, with Brent crude prices in their target range, they're pretty satisfied, despite OPEC's own forecast of market weakness in the second half of 2013.
On the other side of the equation, there remain major questions about global demand for crude. The IEA forecasts that world oil consumption will grow to 90.6 million barrels a day this year from 89.8 million in 2012. If that holds, the demand for OPEC oil should remain healthy.
The IEA has cautioned, however, that demand growth in the hugely important Chinese market is expected to “shift to lower gear” as growth slows and the country seeks alternatives to combat urban pollution.
*************
Ups and downs for an oil cartel
1960
The Organization of Petroleum Exporting Countries is founded by Saudi Arabia, Iraq, Iran, Kuwait and Venezuela. The Seven Sisters of Western oil companies control global production and prices.
1968
OPEC declares the inalienable right of sovereign nations to control their resources for the benefit of national development.
1971
The U.S. pulls out of the Bretton Woods Agreement, taking itself off the gold standard. The U.S. dollar depreciates, dramatically eroding the value, in local currency, of a dollar-denominated crude price paid to OPEC members.
1973-74
OPEC nations nationalize their oil reserves and seize control of production. In response to October's Yom Kippur War, OPEC initiates an oil embargo, quadrupling prices and sparking the first Western "energy crisis."
1979
The Iranian Revolution reduces exports from the Persian Gulf country.
1980
Iraq attacks Iran, launching a devastating eight-year war between two of OPEC's founding members. Production from the two combatants drops by 6.5 million barrels and prices rise to $35 (U.S.) a barrel in early 1981 from $14 in 1978.
1980-81
High prices trigger fuel switching and non-OPEC production increases, and contribute to a global recession that dramatically reduces demand. Prices begin to plunge.
1986
Global prices hit a low of $9 a barrel, devastating the economies of cartel members and non-OPEC producers such as Alberta and Texas. OPEC introduces a quota system for member states.
1990-91
Iraq invades cartel colleague Kuwait; U.S. leads a UN-sanctioned coalition that includes OPEC members Saudi Arabia, Qatar, United Arab Emirates and Kuwait - as well as Canada. Oil prices double after the Iraqi invasion but quickly retreat.
1997-98
In December, 1997, OPEC increases its production quota by 10 per cent. The next year, fast-growing "Asian Tiger" economies hit a wall, sparking an economic crisis that drives down oil demand. Prices average $11 a barrel in 1998.
1998
Iraq is formally removed from OPEC's quota system as Saddam Hussein fails to boost exports above 1.5 million barrels a day following the Gulf War.
2001
OPEC cuts quotas by 3.5 million barrels in response to slumping prices. Terrorist attacks on Sept. 11 send prices lower, prompting another quota cut. Prices rebound to $25 a barrel by March, 2002.
2004
Demand growth in China and other emerging markets - including the Middle East itself - erodes OPEC's spare capacity to less than one million barrels a day, and prices begin to rise.
2007
Angola becomes the newest OPEC member, signalling a surge of production in western Africa.
2008
Strong demand, flat non-OPEC production and a flood of investment money into oil futures drive price to a record $145 a barrel in July. But prices quickly reverse, and with the onslaught of the financial crisis and recession, slump to below $40 by the end of the year. In January, 2009, OPEC members agree to cut production by 4.5 million barrels a day.
2009
Indonesia, the world's most populous Muslim country, leaves the cartel after becoming a net importer of crude.
2011
Libya's revolution removes 1.6 million barrels a day of production and, with the threat of "Arab Spring" disruption in other OPEC countries, prices climb. Saudi Arabia unilaterally boosts production to offset Libyan losses.
2013
Sanctions on Iran cut its exports to one million barrels a day from 2.5 million in 2011, while other OPEC members - notably Saudi Arabia - produce above quota. Rising U.S. production prompts the International Energy Agency to predict the U.S. will be the world's largest oil producer in 2018, taking global market share away from OPEC. Civil war in Syria heightens tensions between Sunni and Shiite Muslims within OPEC.
SHAWN McCARTHY AND JOHN SOPINSKI/THE GLOBE AND MAIL / SOURCE: FEDERAL RESERVE BANK OF ST. LOUIS
The Globe and Mail Inc.
Document GLOB000020130608e9680003o
SHAWN McCARTHY, JEFFREY JONES
STAFF REUT AFP
2717 words
8 Jun 2013
The Globe and Mail
GLOB
English
©2013 The Globe and Mail Inc. All Rights Reserved.
OTTAWA and CALGARY -- OPEC ministers put on a brave face when pressed about one of a number of growing threats to the cartel's influence over world crude oil markets – surging shale oil production in the United States.
At OPEC's home base in Vienna last week, Saudi Arabia's powerful oil minister, Ali al-Naimi, played down the impact of the light, sweet crude that is gushing in record volumes from beneath North Dakota's bald prairie and the scrubby landscape of South Texas.
“This is not the first time new sources of oil are discovered, don't forget history,” he said. “There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?”
Secretary-general Abdalla El-Badri was even more blunt: “OPEC will be around after shale oil finishes.”
Despite the bluster from the biggest names in the 12-nation group that supplies a third of the world's oil, however, it is clear the Organization of Petroleum Exporting Countries is getting nervous, and experts are questioning how long the cartel can act together to hold sway over global oil prices.
At the meeting, where the group kept its production ceiling of 30 million barrels a day, it also took the revealing step of forming a committee to study the impact of the hydraulic fracturing and horizontal drilling. The technology is propelling North America toward energy self-sufficiency and may spread to other countries with their own shale oil prospects.
“It is a great concern for us, even if we do respect the integrity of the U.S. to be self-sustainable in terms of oil and gas,” said Nigerian Oil Minister of Petroleum Resources Diezani Alison-Madueke, whose country is among the most affected in terms of the loss of exports to the United States.
More than 50 years after it was created to wrest economic power from the major oil companies, the OPEC oil cartel finds itself at risk of losing its dominant role in the global oil market. The group is increasingly competing with new oil sources that are starting to chip away at its share in previously secure markets, while a shaky global economy keeps demand for oil at bay. Also troubling for OPEC as it looks to protect oil prices: One key member, long-suffering Iraq, is aiming to dramatically increase production and flex its muscles again as a major exporter.
It adds up to a nightmare scenario for the group. China, Russia and other countries are taking early steps to emulate the North American unconventional oil boom of recent years, which has the U.S. on track to overtake Saudi Arabia as the world's largest oil producer. Some key OPEC members, meanwhile, are eager to pump as much as possible to bring in badly needed revenue, rather than restrain output as part of any concerted effort to add upward pressure to prices.
The risk is that such a scenario leads to cutthroat competition and a flood of oil in global markets, triggering a plunge in prices that could threaten the economic and political stability of its member nations.
“There's a storm brewing on the horizon,” said Greg Priddy, an analyst with Eurasia Group, a Washington-based political risk firm, “You are looking a year or two out before it becomes acute. But that is the direction we are headed.”
How Saudi Arabia and the rest of the fractious group cope with its external and internal threats will have ripple effects around the globe, from consumers ever sensitive to pump prices, to China's fast-growing industries, to Alberta's high-cost oil sands producers that need rich enough prices to justify new investment in their own vast reserves.
The coming ‘supply shock'
There is no question that OPEC still holds sway in the market. Traders from Singapore to New York to Calgary hang on every word its ministers utter as they enter and exit closed-door meetings, to gauge potential impacts on prices. The group's firm hand on its oil taps in the face of growing supplies from non-OPEC countries continues to influence international prices, which have remained around its $100 (U.S.) a barrel target.
Still, OPEC's world is changing.
“They are not at a pivot point yet, but there are clear challenges ahead,” said Daniel Yergin, vice-chairman of IHS Inc. and a leading consultant on the global oil industry.
“There are geopolitical challenges – regional challenges that come with the stand-off over Iran's nuclear program and the concerns Arab Gulf states have over it, and the Syrian conflict, which has elements of being a proxy war among countries that are key members of OPEC.
“And there is the buildup of supply coming from North America – in particular this dramatic increase, this surge, in U.S. oil production – and also the potential recovery of Iraq, [which is] very keen to make up for lost time.”
As recently as last year, OPEC members dismissed booming U.S. shale oil production as a flash in the pan. The formation of a study group to pore over the impacts shows the that thinking has changed.
It is no wonder. In its May Medium-Term Oil Market Report, the International Energy Agency referred to growth in U.S. light oil, along with the Canadian oil sands, as a “supply shock” that will be “as transformative to the market over the next five years as was the rise of Chinese demand over the last 15.”
Driven by the boom in oil production from regions such as the North Dakota Bakken and Eagle Ford in Texas, the United States is now on track to be the world's largest oil producer in the next decade, according to some forecasts.
The IEA, the West's energy watchdog, has predicted the United States will pump 11.1 million barrels a day by 2020, up from nearly seven million in 2012 and surpassing Saudi Arabia in the process. North Dakota production has more than doubled in two years to nearly 800,000 barrels a day. Already, after decades of promises, the shale revolution is helping the U.S. finally shake its “unhealthy addiction” to imported oil, as former president George W. Bush called it.
That alone will not strip OPEC of its overall market power. But cartel members such as Nigeria and Algeria that are known for producing light sweet crude – the easily flowing supplies that are low in sulphur content and simple to refine – are feeling the pinch.
U.S. imports from Nigeria were more than halved to 403,000 barrels a day in March, 2013, from 913,000 in March, 2011, according to the U.S. Energy Information Administration. Nigeria, Algeria and others have redirected exports to Asia and other markets amid expectations that the U.S. will eventually require no such supplies, said Michael Wittner, managing director and head of commodities research for Société Générale SA's Americas operations.
“Is OPEC relevant? As long as the shale oil is a North American thing, yes. That's something I would say will hold for maybe a five-year time horizon.,” Mr. Wittner said. “Out beyond that, the question becomes much more complicated.”
He points out that other countries, including Russia, China, Australia and Argentina, may have large shale oil reserves that could one day mean stiff new competition for the OPEC producers.
“As we move into unconventionals, OPEC is no longer going to hold all the cards,” said Thomas Pyle, president of the Institute for Energy Research in Washington.
Many in the U.S. see Canada and the proposal to build the Keystone XL pipeline to get increasing volumes of Alberta bitumen to the U.S. Gulf Coast as an important move in the geopolitical game.
“If the U.S. government got its act together and approved the Keystone pipeline, it would forge us a lasting relationship with Canada that would shift global energy power quite significantly,” Mr. Pyle said.
An immediate concern for OPEC due to falling light oil exports to the U.S. is increased competition with other crudes such as those from the North Sea and Russia, said Judith Dwarkin, director of research at ITG Investment Research.
“As the U.S. draws less on globally traded crudes, those crudes will then be looking for a home and that's where the pressure comes – competition among non-North American internationally traded crudes of which OPEC is a big part, but there are others,” Ms. Dwarkin said “So it's a somewhat more competitive environment in that sense.”
The Iraq factor
A thornier problem for OPEC is developing from within the family – Iraq.
Blessed with 20 per cent of the world's conventional reserves, it aims to boost its oil exports to seven million barrels a day from the current capacity of about three million. Even if it accomplished only half that, it would be a major source of additional production to a global market that OPEC says is already well supplied.
Unless economic growth rebounds smartly, OPEC members will have to cut production by as much as one million barrels a day over the next year, even as Iraq – backed by China, which already buys half its crude – looks to add 500,000 barrels a day each year. Failure by the cartel to respond would leave the world awash in crude, and threaten to send global prices sharply lower.
But Iraq remains deeply divided along sectarian lines. Sunnis, Shiite and Kurds are vying for power – often violently – in a country that has yet to stabilize after the U.S. invasion and occupation, and in a region where tensions have escalated with sanctions against Iran and the Syrian civil war in which OPEC heavyweights are backing competing sides. Political upheaval could thwart the best intentions of rebuilding Iraq's oil sector.
In addition, Saudi Arabia, which requires growing oil revenues to finance ambitious economic and social programs, will have limited patience for unrestrained production from Iraq, Mr. Yergin said.
“In any battle for market share, Saudi Arabia has the heft that no one else has,” he said. “If Iraq does continue to substantially grow, there are definitely limits to which the other Gulf countries – not just Saudi Arabia – are willing to make room to accommodate Iraqi supply. “ Since its founding in 1960, OPEC has faced numerous crises, including the Iranian revolution and Iran-Iraq war in 1979-80, a precipitous drop in world demand that pulled prices down to $9 a barrel in 1986, then the runup in 2008 to $148 a barrel, a price that threatened the world economy. Experts caution that today's pressures do not necessarily mean the cartel is in trouble.
“It depends what your definition of trouble is,” said Manoucher Takin, an analyst at the London-based Centre for Global Energy Studies, a group founded by former Saudi oil minister Sheik Ahmed Zaki Yamani. “Ever since OPEC was established, on many occasions, OPEC has been said to be in trouble. But it is still here.”
Mr. Takin said OPEC ministers are reluctant to act in the market based on forecasts of things such as shale oil production, but wait until actual conditions warrant a new strategy. At this point, with Brent crude prices in their target range, they're pretty satisfied, despite OPEC's own forecast of market weakness in the second half of 2013.
On the other side of the equation, there remain major questions about global demand for crude. The IEA forecasts that world oil consumption will grow to 90.6 million barrels a day this year from 89.8 million in 2012. If that holds, the demand for OPEC oil should remain healthy.
The IEA has cautioned, however, that demand growth in the hugely important Chinese market is expected to “shift to lower gear” as growth slows and the country seeks alternatives to combat urban pollution.
*************
Ups and downs for an oil cartel
1960
The Organization of Petroleum Exporting Countries is founded by Saudi Arabia, Iraq, Iran, Kuwait and Venezuela. The Seven Sisters of Western oil companies control global production and prices.
1968
OPEC declares the inalienable right of sovereign nations to control their resources for the benefit of national development.
1971
The U.S. pulls out of the Bretton Woods Agreement, taking itself off the gold standard. The U.S. dollar depreciates, dramatically eroding the value, in local currency, of a dollar-denominated crude price paid to OPEC members.
1973-74
OPEC nations nationalize their oil reserves and seize control of production. In response to October's Yom Kippur War, OPEC initiates an oil embargo, quadrupling prices and sparking the first Western "energy crisis."
1979
The Iranian Revolution reduces exports from the Persian Gulf country.
1980
Iraq attacks Iran, launching a devastating eight-year war between two of OPEC's founding members. Production from the two combatants drops by 6.5 million barrels and prices rise to $35 (U.S.) a barrel in early 1981 from $14 in 1978.
1980-81
High prices trigger fuel switching and non-OPEC production increases, and contribute to a global recession that dramatically reduces demand. Prices begin to plunge.
1986
Global prices hit a low of $9 a barrel, devastating the economies of cartel members and non-OPEC producers such as Alberta and Texas. OPEC introduces a quota system for member states.
1990-91
Iraq invades cartel colleague Kuwait; U.S. leads a UN-sanctioned coalition that includes OPEC members Saudi Arabia, Qatar, United Arab Emirates and Kuwait - as well as Canada. Oil prices double after the Iraqi invasion but quickly retreat.
1997-98
In December, 1997, OPEC increases its production quota by 10 per cent. The next year, fast-growing "Asian Tiger" economies hit a wall, sparking an economic crisis that drives down oil demand. Prices average $11 a barrel in 1998.
1998
Iraq is formally removed from OPEC's quota system as Saddam Hussein fails to boost exports above 1.5 million barrels a day following the Gulf War.
2001
OPEC cuts quotas by 3.5 million barrels in response to slumping prices. Terrorist attacks on Sept. 11 send prices lower, prompting another quota cut. Prices rebound to $25 a barrel by March, 2002.
2004
Demand growth in China and other emerging markets - including the Middle East itself - erodes OPEC's spare capacity to less than one million barrels a day, and prices begin to rise.
2007
Angola becomes the newest OPEC member, signalling a surge of production in western Africa.
2008
Strong demand, flat non-OPEC production and a flood of investment money into oil futures drive price to a record $145 a barrel in July. But prices quickly reverse, and with the onslaught of the financial crisis and recession, slump to below $40 by the end of the year. In January, 2009, OPEC members agree to cut production by 4.5 million barrels a day.
2009
Indonesia, the world's most populous Muslim country, leaves the cartel after becoming a net importer of crude.
2011
Libya's revolution removes 1.6 million barrels a day of production and, with the threat of "Arab Spring" disruption in other OPEC countries, prices climb. Saudi Arabia unilaterally boosts production to offset Libyan losses.
2013
Sanctions on Iran cut its exports to one million barrels a day from 2.5 million in 2011, while other OPEC members - notably Saudi Arabia - produce above quota. Rising U.S. production prompts the International Energy Agency to predict the U.S. will be the world's largest oil producer in 2018, taking global market share away from OPEC. Civil war in Syria heightens tensions between Sunni and Shiite Muslims within OPEC.
SHAWN McCARTHY AND JOHN SOPINSKI/THE GLOBE AND MAIL / SOURCE: FEDERAL RESERVE BANK OF ST. LOUIS
The Globe and Mail Inc.
Document GLOB000020130608e9680003o
