US shale has 'blinked' in battle against OPEC: IEA


This dramatic fall in prices was due to weak demand, a strong dollar and booming U.S. oil production, according to the International Energy Agency (IEA). 

However, OPEC's reluctance to cut output has also been seen as a key reason behind the fall. This has led some analysts to argue that the rivals have been playing a "game of chicken" over the price of oil before cutting back to ease the oversupply. 

And U.S. shale producers appear to have succumbed to the pressure. Over recent months, the producers have been busy dialing back their operations and research firm Baker Hughes reported Friday that the U.S. oil rig count had fallen for the 22nd consecutive week. 

But the IEA stated Wednesday that far from winning the "battle," it had only just begun for OPEC.

Russian oil companies are coping well, Brazil's state oil firm was a "success" story and Chinese, Vietnamese and Malaysian output was also seeing healthy growth, it said. 

"(It would be) premature to suggest that OPEC has won the battle for market share," the IEA said.

"The move by the group's core Gulf members last November not to cut production in defense of prices was only the first step in a plan that includes actually ramping up output and aggressively investing in future production capacity." (by Matt Clinch, CNBC)