The usually cautious Paris-based International Energy Agency (IEA), the club of the rich Western consumer countries, did not mince words when it stated in its monthly market report on Friday, "It is increasingly clear that we have begun a new chapter in the history of the oil markets."
Though it usually refrains from putting oil price forecasts, this time it pointed out that, "supply and demand balances suggest that the price rout has yet to run its course," and that, "barring any new supply disruption, downward price pressures could build further in the first half of 2015."
So the world should prepare for an extended period of oil price decline that may lead to a new chapter in the history of the oil industry.
In fact, the market has already entered into that mood to the extent that even a report about a decline in US oil inventories failed to push oil prices upward.
Last week, official stock figures showed that US supplies had dropped by 1.7 million barrels on the week ending Nov. 7, at the time market analysts like Platts were expecting that drop to be around 500,000 barrels only.
Moreover, distillates showed a decrease by 2.8 million barrels, while estimates were putting such a drop at 1.6 million barrels during the same period. Such figures used to move the market, but not this time.
And that is one of the indicators of the changes taking place that may open the way to a new chapter in the history of the oil industry.
Add to that the growing signs of the slowdown in the Chinese economy, notably in the area of the industrial production and retail activity according to October figures. But more important is that third quarter performance of the Chinese economy turned out to be its lowest during the five-year period.
All this leads to concentration of attention on the upcoming OPEC meeting in Vienna later this month, which many observers think will be the most important one in years.
Will the organization repeat what it did six years ago and venture into a collective effort cutting its output to prop up prices?
So far, there is only some talk in the air without concrete steps to come up with specific figures on who is to cut how much.
Part of the problem is the typical dilemma of going back to the thorny quota issue and trying to figure out how to shoulder that cut.
That is being complicated by the growing security, political and economic pressures in countries like Libya and Iraq who, despite their domestic problems, have managed to increase their production. And accordingly they are not in a mood to discuss their share of any potential cut.
Moreover, even when some cut takes place as happened by the end of last month, when the group’s output was eased by 150, 000 barrels per day (bpd) to 30.6 million bpd, that cut was offset by an increase of supplies from other non-OPEC producers.
Such a move brings to the fore the issue of who is going to shoulder the responsibility of defending the market and whether that is OPEC’s sole duty.
If the previous collapse in the oil market back in 1986 was any guide, non-OPEC producers have to contribute something even if it is symbolic.
So far, there is no approach to make that happen. But, more important and unlike 1986 or even OPEC’s last cut in 2008, there is a new player in the field, that is the United States with its burgeoning shale oil booming output that managed to raise its domestic production to its highest level in three decades and is enabling Washington to move to push both Riyadh and Moscow from the position of the top world oil and gas producer.
Such developments come with a price and responsibility. Is the United States ready to put its hand and joint efforts with others to achieve some degree in the oil market that benefits producers as well as consumers and at the same time the industry in general in terms of ensuring enough revenue to continue investing in conventional as well as renewable energy resources, or will it stick to its orthodox ideology of leaving it to market to decide on prices?
It is too early to see what is going to happen. After all, tough decisions need time to materialize and in most cases when there is no other alternative.
One way of creating a conducive environment is to allow price to deteriorate, state coffers bleeding and some conventional and non-conventional, high cost production becomes unviable economically.
Then is the time to start serious talks and probably start a new chapter in the history of the oil industry.