What's going on?

OPEC � the influential group of 14 oil-producing countries � announced on Tuesday that it expects demand for its oil to fall sharply. That ain�t golden.

What does this mean?

The US has become the world�s largest oil producer, thanks in large part to rising output from the hydraulic fracturing � or �fracking� � of US shale oil. And that, in turn, is creating an oversupply which is displacing more established producers � namely the oil-producing nations collectively known as OPEC. The group now sees its share of the global oil market falling from 37% to 31% by 2024 � leading it to slash demand estimates for its oil by 7%.

Why should I care?

For markets: From Aramco to Aram-no thanks.
OPEC�s reduced forecasts won�t be good news for Saudi Arabia, which is currently trying to fetch a $2 trillion valuation for Aramco, its national oil company. Lower demand for OPEC�s oil could force its members � including Saudi Arabia � to reduce output even further from already-agreed levels this year, or else risk too high a supply pushing down prices. At around $60 a barrel, oil prices are currently too low for most OPEC countries to cover their national spending. This might give potential investors in Aramco�s initial public offering pause: lower oil prices or reduced production could spell trouble for its overall revenue.

The bigger picture: Cuts beget cuts.
With US oil output expected to climb more than 40% by 2025, OPEC is under pressure either to cut production further or compete more fiercely over a shrinking piece of pie. Its current strategy might be backfiring: investment in US shale oil drilling increases whenever OPEC slashes production to prop up the oil price, perpetuating oil�s oversupply and trapping OPEC in a spiral of production cuts. And while OPEC forecasts global oil consumption will continue until 2040, it doesn�t much help that sustainability-minded countries are shifting away from fossil fuels.