More boom, more bust for oil

The industry's history suggests that Opec’s latest efforts to stabilise the oil price will not be successful

The latest oil-market narrative holds that in late 2014 Opec embarked on a new strategy that prioritised market share over high (and stable) oil prices, based on the view that high-cost and capital intensive US shale would be forced to swing under a glutted market. Instead, shale persevered, inventories swelled, and crude prices crashed, prompting Opec to resume the mantle of supply manager late last year. This narrative, and Saudi Arabia's newfound willingness to manage markets, underpins prevailing forecasts showing stable prices around $60 per barrel for the foreseeable future. But my view, informed partly by historical research undertaken for my recently published book, Crude Volatility: