The Organization of the Petroleum Exporting Countries on Thursday decided against cutting oil production, which would have helped reverse the dramatic drop in prices since the summer.
Saudi Arabia wants to allow prices to continue to drop in order to reduce profitability for U.S. shale oil producers, such as those working the Bakken formation in North Dakota. The Saudi oil minister’s argument won out against poorer nations such as Iran, Venezuela and Algeria, according to Reuters.
Not all involved were happy with the decision, with one delegate saying that he didn’t know “how practical it is to try to kick shale out of the market.”
Oil prices are now below $70 a barrel, down from over $100 a barrel in July.
Saudi Arabia’s light sweet crude is cheaper to produce than shale oil, which is extracted by hydraulic fracking. The Saudis hope that by keeping prices low, they can drive upstart (and debt-heavy) American competitors out of the market.
As with many economic changes, not everyone will be effected equally. The New York Times rounds up the winners and losers here.
