Part 5/8:
OPEC has historically operated under a model that encourages member nations to limit production to maintain high prices. However, as the U.S. ramped up shale production and sought to circumvent OPEC control, Saudi Arabia’s efforts to stabilize prices lost efficacy. Member states began to cheat on agreed-upon production caps, exposing the fractures within the cartel and reducing its collective power.
The Saudi government’s strategy aimed at propping up prices through cooperative production cuts was thwarted by non-compliance among members and an increasingly competitive U.S. oil sector. As further evidence of the turbulence in the international oil markets, Trump's policy shifts during his presidency adversely affected demand forecasts, significantly contributing to the price crash.