Today, as oil producers scramble to gain market share, prices remain down more than 70 percent from summer 2014. In the West, the price plunge is often attributed to China and other emerging economies. In this view, the collapse of prices originates from China’s growth slowdown.

It is a great story but not entirely valid. In 2014, China became the world’s largest consumer of oil accounting for one-third of global oil demand growth. Moreover, China’s oil consumption went up 8 percent in 2015; it was the second-highest annual increase after 2010.

Another favorite scapegoat has been Iran. In this case, plunging prices have been attributed to Iran’s re-entry into the oil market. In reality, oil prices plunged for months before the lifting of the Iran sanctions and stabilization at below US$30.

Today, the US is the largest oil producer (13.7 million barrels per day), as opposed to Saudi Arabia (11.9mb/d), Russia (10.9mb/d), China (4.6mb/d) and Iran (3.4mb/d). In that list, Iran doesn’t yet make it to the top-20. In the short-term, it hopes to increase production to 700,000 barrels per day.

In reality, the price plunge has more to do with geopolitics. Saudi Arabia does not want to give market share to US shale producers, while low prices are harming even more Iran and Russia.

The net impact has been cheap oil and overcapacity. More cheap oil could cut annual revenue among OPEC member-states almost in half, to US$550 billion. Since the OPEC still accounts for about 40 percent of total output worldwide, it is no longer united. Smaller oil exporters, including Venezuela and Nigeria, advocate price cuts.

Recently, oil ministers from Saudi Arabia, Russia, Venezuela and Qatar agreed to a conditional freeze of their oil output levels. However, in the present status quo, that is not likely.