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The Effect of US Shale Oil Production on Local and International Oil Markets

Author

Listed:
  • Maitham A. Rodhan

    (Basrah University for Oil and Gas, Basrah, Iraq; & Corvinus University of Budapest, Budapest, Hungary)

Abstract

US shale oil has created dramatic changes in international oil markets. The United States became the world's biggest producer of crude oil after it overtook Saudi Arabia and Russia and then returned to exporting crude oil after a stop that lasted more than four decades. Its imports of crude oil decreased significantly. US shale oil had a remarkable impact on the structure of international crude oil trade; Other producers, including OPEC, were affected by the decline in their shares in the global oil market and the decline in their financial revenues. Technological development has played an essential role in the success of US shale oil by reducing costs and increasing economic feasibility. Therefore, US shale oil is no longer highly sensitive to lower oil prices, as it was before. Furthermore, the continuous increase in crude oil prices from $24.4 per barrel in 2001 to $97 and $111.6 in 2008 and 2012, respectively, was enough to make shale oil production economically profitable. Now, the United States plays an essential role in the global oil market, as the largest consumer and producer and, behind China, the second largest importer. Shale oil is expected to play a growing role in the US oil sector and the global oil industry in the future.

Suggested Citation

  • Maitham A. Rodhan, 2023. "The Effect of US Shale Oil Production on Local and International Oil Markets," International Journal of Energy Economics and Policy, Econjournals, vol. 13(4), pages 433-443, July.
    • Handle: RePEc:eco:journ2:2023-04-45
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    References listed on IDEAS

    as
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    8. Hilde C. Bjørnland & Julia Skretting, 2024. "The shale oil boom and the US economy: Spillovers and time‐varying effects," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 39(6), pages 1000-1020, September.
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    Cited by:

    1. Maitham A. Rodhan, 2024. "Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 162-170, May.

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    More about this item

    Keywords

    US Shale Oil; Crude Oil Price; International Oil Market; OPEC; Fiscal Break-even Price;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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