Ample shale oil and gas production in the US has finally started to influence global crude pricing trends. Coupled with a slowdown in Europe and China economies, it was enough to pressure crude prices to retreat from $115 a barrel in June to $97 as of week’s end, quite a significant drop of more than 15 per cent in less than three months.

Other attendant factors are also at in work in returning the relationship between supply and demand. Even as demand dropped in Europe and China, supplies increased from Libya, Iraq and Iran (after the partial lifting of sanctions).

This was enough for the Organisation of Petroleum Exporting Countries (Opec) to talk about staving off further drops, no doubt concerned over the potential losses they will have to absorb from lower oil revenues.

While it is unlikely prices will fall below $80 a barrel, the mere thought that such a level will be breached has set off alarm bells. This will require a quick and co-ordinated action by Opec countries in tandem with those oil exporters who are not members of the organisation, such as Russia and Norway.

The initial and instant reaction came from Saudi Arabia, the largest oil exporter in the world, and cut production by 400,000 barrels a day from 10 million barrels.

However, the increased supplies expected from Libya, Iraq and Iran are likely to exceed 2 million barrels a day. In addition, there is the possibility of increased US shale oil production far exceeding the cuts carried out by some countries so far.

It seems that there are fears of competition even among Opec members. While GCC countries expressed a keenness to balance supply and demand to support oil price stability, Iraq intends to double its production to up to 6 million barrels.

Iran on the other hand is also trying to compensate for the boycott period, when it was unable to cover its Opec quota. At the same time, Libya will increase production from less than half a million to 1.1 million barrels a day this month and 1.3 million barrels a day next month, commensurate with its production quota.

Oil price stability at or around the $100 a barrel mark has become an absolute development issue for all oil producing countries to meet their rising spending needs. It means co-ordination and a collective commitment to agreements within Opec is vital and in the best interests for all its members, more so since there have been projections from the International Energy Agency (IEA) talking of reduced demand for Opec oil after the increase in shale oil supplies in the US.

The need now is for co-operation in define a new production threshold and a platform to attain higher returns. This is despite past experiences which show Opec countries have an innate difficulty in committing to agreed upon production ceilings.

However, the current circumstances and emergent challenges, in particular the possibility of expansion in the production of shale oil in other countries, mean there are not many options available for Opec. This is despite the fact that the life span of shale oil and the high cost of its production cannot be compared to the huge reserves and relatively low cost of traditional crude production.

These are some of the pressing factors Opec countries can exploit to obtain a fair price for their oil sales and to meet their needs for development investments and maintaining the balance in international oil markets.

These factors, at the end of the day, benefit producers and consumers and favour the stability of global economy as well.