Saudi Arabia and the other members of OPEC were caught, it would seem, somewhat by surprise when North American shale oil producers beginning kicking their activities into a higher gear a few years back. Since then, production levels of petroleum and natural gas in the United States and Canada have shot skyward, even if something of a softening became evident over the last couple of years. When Saudi Arabia responded by leading OPEC to increase production so as to tamp down on petroleum prices, quite a few North American shale operations suffered as a result.

At the same time, oil prices that dropped to around $20 barrel did a great deal of harm to the economies of petroleum producers around the world. From Venezuela to Russia, many of these petroleum-dependent nations and their citizens suffered deeply as oil prices fell.

While there can be no doubt that the punitive action behind these plummeting prices was somewhat effective, those results have since faded largely into memory. In fact, investment levels have ticked up sharply since last year, with new records being set in both the United States and Canada. As those who read my blog will see, this means that quite a healthy amount of production will likely remain the norm for some time, even if many OPEC members might wish to benefit from the higher prices that tightened output would normally bring.

This is not to say that they will necessarily remain completely disappointed for long, however. While clamping down on production significantly seems unlikely, since North American producers would benefit just as much, especially price-sensitive OPEC members might well be saved by a development happening elsewhere. With demand across much of Asia still growing steadily and seeming set to continue, even relatively unconstrained production could still see petroleum pricing rising a bit into the future.

For that to happen, many analysts believe, global stockpiles of petroleum must first still be drawn down to a significant degree. With record-setting buildup having accumulated through the shocking prices of last year, something of a buffer needs to be worked through before petroleum prices will once again fall clearly in line with the forces of current supply and demand.