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OPEC’s decision to defend its market share by opting for freewheeling crude oil production appears to be working.

It was only a few months ago the International Energy Agency said the market was “drowning in oil” and prices plummeted to less than $30/b. Fast forward to July and the IEA said there had been an “extraordinary transformation” from a major surplus in the first quarter to near-balance in the second.

Non-OPEC production remains on course to fall 900,000 b/d this year before staging a modest recovery in 2017, according to the IEA.

Meanwhile, OPEC production hit an eight-year high in June, helped by Iran’s post-sanctions return being better than most analysts expected. Couple that with Iraq’s substantial rise in 2015 and the IEA commenting that “low-cost Middle Eastern OPEC countries have seen output rise steadily in recent years” and not only is OPEC defending its market share, it’s slowly increasing it.

So far, so good.

However, there are a number of flaws to the plan.

First, it has only delayed the inevitable. US shale producers are becoming more flexible and prices around $50/b start to make it economic for some to increase output.

Second, even the better placed OPEC members have felt the squeeze — evidenced by the mooted privatizations from Kuwait and Saudi Arabia to generate extra cash for depleted government coffers. At the thin end of the wedge there are cash-strapped countries like Venezuela who led the charge for an output freeze, only for the proposal to be scrapped at the 11th hour.

Third, OPEC may well have a shared goal but that is often driven by Saudi Arabia and it doesn’t mean individual members are fully committed: they do say a camel is a horse designed by a committee.

Indeed, while many talk of OPEC defending its market share, what about the jostling for market share within the group itself?

Saudi Arabia has made it clear it does not want to cede ground to Iran and Iran has made it clear it wants its pre-sanctions market share back. Nigerian outages and Venezuela’s decline have helped keep a check on OPEC’s runaway production which was 32.73 million b/d according to S&P Global Platts June survey. But what happens when they recover?

Whether this market share strategy proves to be a success depends on the key part of OPEC’s mission statement: to “co...