The Organization of the Petroleum Exporting Countries (OPEC) is still increasing production to gain market share. Just as they did in 1986 when additional supplies from the North Sea and Alaska dropped prices. OPEC is vowing they will continue producing and cutting prices to keep their market share.
US produced crude break-even is near $10/bbl. Although the costs vary greatly between oil wells and producers. Expectations are that $10/bbl crude is about the break-even point to continue producing out of existing wells. This is in part to increase drilling efficiency and hedging of fuel produced. Although searching for new wells has virtually stopped, there was a silver lining on the horizon as the Baker Hughes Active Oil-Drilling Rig Count increased by 17 on Friday [12/18/15], after falling by 1,166 since last year.
Iran’s “End of Oil Sanctions Agreement” although proudly touted by Obama, has not been finalized in congress or signed by Iran. Assuming the sanctions are let go next year, Iran expects and is capable of adding a significant amount of Crude to OPEC’s current production. Iran supports the OPEC mindset of maintaining market share rather than supporting prices or profits.
