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The Saudi-OPEC price war is now nine months old. Two OPEC meetings have passed without revisions or changes in strategy. It is a war against high-cost unconventional American producers that are seen as the principal threat to market share.

The West Texas Intermediate price per barrel has recovered since the low of the mid-$40 bottom to slightly above $60. This has become a trading range with algorithms following momentum making a price range. Financial or paper traders and speculators have moved the price of oil in a “rally” up $15.

Oversupply still overshadows the market. The balance of supply and demand awaits the onset of winter or 2016. The market share for OPEC and Saudi Arabia continues to expand at the expense of non-OPEC producers, but American shale or unconventional production has not declined to the point that an acceptable world balance between supply and demand appears to be in the making.

Daniel Fine (Daily Times file photo)

The CEO of Conoco Phillips was invited to the recent preliminary OPEC meeting and he challenged the producer countries with a warning: American “high cost” production will survive the price war with cost-saving efficiency already in process and yet to come. This promises American oil supply at less cost and a prospect of little change in world supply while demand remains weak and possibly weaker with China importing less crude as well as iron ore and other commodities.

What is now at play in oil price formation is geopolitics.