The weight of the US as a crude producer has almost doubled after the shale revolution, rising from about six to seven per cent of global oil output to roughly 12 per cent.
The severe drop in oil prices, which started in mid-2014 and continues to this date, is having a sizeable impact on Gulf countries. Low oil prices are a direct consequence of weak global demand and a considerable oversupply.
The Opec, which controls about 30 per cent of the world's crude output, is often able to influence prices at a global scale. However, the United States has driven oil production growth in the last years, accounting for 82 per cent and 36 per cent oil output growth in 2014 and 2015 respectively.
The weight of the US as a crude producer has almost doubled after the shale revolution, rising from about six to seven per cent of global oil output to roughly 12 per cent. The new situation reduced the influence of the Opec.
With the US adding up more barrels to the global supply, the effect of production cuts on prices might not have been substantial. Moreover, it could have potentially slashed its market share in favour of competitors.
Oil market dynamics in the US are starting to change from the supply side; pumping flattened in the beginning of 2015. Production increases in regions with abundant shale rock, made possible by advances in hydraulic fracturing techniques, are starting to vanish.
Production in Eagle Ford, Bakken and Niobrara, which account for 41 per cent of US oil output, already peaked. Permian, a shale region that concentrates 22 per cent of US oil production, stagnated in the beginning of the year.
All shale regions showed a sharp decline in the number of rigs, but at the same time output per rig increased markedly, probably due to companies seeking to increase their profitability amid the low-price environment.
Also, all main regions show increasing depletion rates, signalling steeper production declines to come. It is unclear whether output decline is only due to lack of investment or unavailability of wells also plays a role. In any case, without marked improvements in oil prices, pumping in the US is unlikely to rise again.
The US has been the main driver of crude production growth in the last five years. However, it is only the second-largest non-Opec oil producer after Russia, and it is followed by China, Canada and Mexico.
Production decisions of these main producers have the potential of determining the supply glut. The industry's activity in Russia, China and Mexico remained remarkably stable in the last five years.
In Canada, the evolution of the shale oil industry has been similar to the one in the US, and it is also showing signs of exhaustion. Therefore, upcoming growth of global crude output depends on the Opec to a large extent.
However, the reaction of some Opec members has been to increase production since oil prices started to fall, adding almost two billion barrels per day to total oil production, and contributing to almost 40 per cent on output growth. This decision offset the potential effect of US shale weakness on oil prices.
The negative evolution of shale industry in the US, together with its apparent production stability elsewhere, opens up a possibility for the Opec to lower activity levels and seek higher prices.
While there is still the risk of losing market share after a production cut, the likelihood of such a measure to have an impact on prices is higher than a year ago. The main concern of the organisation of exporters should be to make sure that the price increase offsets the decline in quantity.
Oil-dependent GCC countries, which witnessed severe declines in export revenue and a sizeable deterioration of their fiscal balances would be benefited from the measure. The time for the Opec to act is coming.
The writer is an economist at Asiya Investments Company. Views expressed are his own and do not reflect the newspaper's policy.