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Old 13th Dec 2014, 11:58
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Metro man
 
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The reason there is a glut is that OPEC wants to keep the price of oil below the cost of oil that is produced from shale oil and from fracking.
Correct, once the price goes below around $70 a barrel fracking becomes uneconomic at present. As the technology improves and economies of scale come into play, that price could easily drop.

Producing countries got used to living on the income from $80-100 a barrel oil and are now in a bind, reducing production to drive up the price makes fracking worthwhile but increasing production reduces prices even further.

The Saudis have deep pockets and can afford a few years of belt tightening but not the Russians.
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