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In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an attempt to squeeze higher-cost producers including US shale oil out of the market. Over the next year, crude oil prices crashed, with large repercussions for the global economy. We present a simple equilibrium model that explains the fundamental market factors that can rationalize such a "regime switch" by OPEC. These include: (i) the growth of US shale oil production; (ii) the slowdown of global oil demand; (iii) reduced cohesiveness of the OPEC cartel; (iv) production ramp-ups in other non-OPEC countries. We show that these qualitative predictions are broadly consistent with oil market developments during 2014-15. The model is calibrated to oil market data; it predicts accommodation up to 2014 and a market-share strategy thereafter, and explains large oil-price swings as well as realistically high levels of OPEC output.

Petroleum products --- Oil-shale industry. --- Petroleum industry and trade. --- Prices. --- Organization of Petroleum Exporting Countries. --- Energy industries --- Oil industries --- Petroleum industry and trade --- Petroleum --- Prices --- Munazẓamat al-Buldān al-Muṣaddirah li-Nafṭ --- O.P.E.C. --- O.P.E.P. --- OPEC --- OPEK --- OPEP --- Organisation of Petroleum Exporting Countries --- Organización de Países Exportadores de Petróleo --- Organizația Țărilor Exportatoare de Petrol --- Organization of the Petroleum Exporting Countries --- Sekiyu Yushutsukoku Kikō --- Ūbbik --- Ūpik --- Sāzmān-i Kishvarʹhā-yi Ṣādirʹkunandah-yi Naft --- אופ׳ק --- منظمة البلدان المصدرة للبترول --- منظمة البلدان المصدرة للنفط --- اوبك --- اوپك --- سازمان کشورهاى صادرکنندهى نفت --- OPEC (Organization of the Petroleum Exporting Countries) --- سازمان کشور‌هاى صادرکننده‌ى نفت --- Agriculture: Aggregate Supply and Demand Analysis --- Commodities --- Consumption --- Demand elasticity --- Derivative securities --- Economic theory & philosophy --- Economic Theory --- Economic theory --- Economics --- Elasticity --- Energy: Demand and Supply --- Energy: General --- Expenditure --- Expenditures, Public --- Finance --- Financial institutions --- Financial Instruments --- Futures --- Industries: Energy --- Institutional Investors --- Investment & securities --- Investments: Energy --- Investments: Futures --- Macroeconomics --- Macroeconomics: Consumption --- Macroeconomics: Production --- Mining, Extraction, and Refining: Hydrocarbon Fuels --- Monopolization Strategies --- Monopoly --- National accounts --- National Government Expenditures and Related Policies: General --- Non-bank Financial Institutions --- Oil consumption --- Oil prices --- Oil production --- Oil --- Pension Funds --- Petroleum, oil & gas industries --- Production --- Public expenditure review --- Public finance & taxation --- Public Finance --- Saving --- Wealth --- United States