The oil price spike of 2008, as economic theory would suggest, has delivered a supply response: US shale has been significant, proven oil reserves (globally) have risen and, in 2012/2013, the market has registered a 'supply surplus'. Prices, though, have held up well (given significant supply disruptions). According to the EIA, oil supply 'disruptions' account for 3.25 mbpd of oil, see chart. Currently, though, oil price risks are broadly balanced (with Saudi in a strong position to influence supply/price). If Iranian and/or Libyan production returns to the market, Saudi is likely to cut production to keep prices within their range (their fiscal surplus is strong and stability in the region is one of their key goals). Equally, though, if supply is disrupted, Saudi will increase output. Naimi (Saudi Arabia's oil minister) made that point today - saying: i) that Saudi will raise output if any shortages arise from Ukrainian tensions.

Gavin Wendt

Interesting reading and thanks for sharing. A significant proportion of shale oil production in the US is economic only if base-case oil prices remain high. It's certainly added to production volumes but it requires a robust price to be viable. Predictions in some quarters of oil prices falling to $60 or even $40 a barrel won't happen.