The current crude oil prices of approximately $50 per barrel is more than half below their peak of $107 in June 2014. Some have predicted that the prices will continue to fall to prices of $20 or $10 per barrel. The economic growth in the U.S. has been average 2.3% every year, following the mid-2009 recovery. After the biggest recession since 1930s, the rate is half of what is expected following a rebound. At the same time, China’s growth is slowing down. This is a negative in Japan and a minimal for the euro zone. When you add vehicle gas mileage in the U.S. having a large increase, along with additional conservation measures, it is clear to see what has led the global oil demand to weaken and possibly even declining.

With the increase of horizontal drilling and hydraulic fracking in the U.S., there has been a climb in output. 12 months since November 2013, the output for the U.S. has increased by 15%. At the same time, imports have declines by 4%. There are other areas that played a role in the change as well. One of those being OPEC cartel’s eroding power. The Organization of Petroleum Exporting Countries, like other cartels, is built to ensure above-market and stable crude prices. With the high prices, there is more probability for cheating, with cartel members exceeding their quotas. The leader of the cartel, for example Saudi Arabia, must cut their own output to prevent a drop in prices for the cartel to function and the cheaters being accommodated. Yet, the past cutbacks of Saudis has led to market-share losses.

Being backed by various oil producers that sizable financial resources in the Persian Gulf, Saudis have played a game of chicken. OPEC announcement about not cutting output could oil prices to drop even further.