Although oil is less important to the global economy than it was 40 years ago, there is nonetheless a dramatic change currently underway in energy markets

Although oil is less important to the global economy than it was 40 years ago, there is nonetheless a dramatic change currently underway in energy markets. Technological improvement and a growing number of alternatives has culminated in the world being a lot less energy intense than it was in the 1970s, but there is a lot of brinkmanship occurring between OPEC and the burgeoning US shale energy market at present, as they vie for production and price leadership and to limit marginal players disturbing perceived 'equilibrium'. By keeping its production target unchanged last week, OPEC has stepped away from its traditional role of stabilising prices through changes in supply, and instead is using prices to cull marginal supply, both present and future. This is a much longer 'equilibrium game' and places increased pressure on higher cost OPEC members such as Iran and Venezuela, who need higher prices to balance their budgets. Follow the link for the full report: (VIEW LINK)