Source: Nasdaq.com From its June 2014 peak of $US115 a barrel, the oil price has tumbled almost 60 per cent. As of Tuesday afternoon, Brent Crude, the international benchmark, was fetching $US47.43 a barrel, the lowest it has been since February 2009, when it plunged to $US39.55

Source: International Energy Agency Over the past five years, demand for oil has almost consistently outpaced production. This has kept the oil price high - averaging $US102.06 a barrel since January 2010 - which in turn spurred further production, as oil producers scrambled to take advantage of the booming profits.

But as demand has weakened in Europe and Asia, due to economic growth slowing more quickly than expected in key European markets and in China, oil producers have begun posting record production. Russia's production is now at a post-Soviet era high, Iraqi oil exports are at a 35-year peak, and the US has become the world's largest oil producer, churning out 11 million barrels a day. Coupled with increasing output from Libya and Iraq during 2014, despite domestic turmoil, the oil price has tumbled more than 50 per cent since June 2014, as supply rapidly overtook demand.

Source: International Energy Agency A key reason for the worldwide oil glut is the rapid rise of America's domestic oil industry to global dominance. High oil prices prompted America to begin investing heavily in its domestic drilling operations as a means of obtaining energy self-sufficiency. Since 2008, the American domestic oil industry has boomed, as companies invested heavily in fracking projects on the expectation that high prices would continue. The US is now the world's largest oil producer. Its enormous production output - 8.8 million barrels a day in September 2014 - coupled with minimal need for oil imports has contributed to oversupply.

Source: The Conversation The "break-even" price point is the price at which revenues from oil sales will allow the government to meet its spending commitments. It is particularly relevant to the OPEC nations, which use their oil revenues to fund their welfare programs which citizens have come to rely on. As the current situation is effectively a "price war" between US oil producers and the OPEC nations, the break-even price is a critical measure when considering how far the price of oil might tumble.

It comes down to how long both sides are willing to ride it out. That is, how much financial hardship they can take until one buckles. Loading At $US47.43 a barrel, most OPEC producers are operating below profitability. However, the official line from OPEC is that they will not curb production, regardless of how far the price falls. Many of them have huge cash reserves (stockpiled during the boom) to fall back on. Saudi Arabia, which has $900 billion in cash reserves, has said it is prepared for the price to fall to $US20 a barrel. For this reason, most analysts expect the US shale industry to lose the oil price war, as many of the US fracking companies will be unable to withstand crippling debts in the medium term.