Could the oil coming out of Canada and Mexico be profitably produced if OPEC were to drop prices down to something like cost + 10%?
My understanding is that oil in the ME can be extracted for around $10/barrel. As the lowest-cost volume producer (assuming they are), they have the power and ability to set a price at which they can maximize profits and minimize competition. Everyone else is only in the business because OPEC has prices set high enough that their costs are still below OPEC's price. Should OPEC drop prices below other producers' costs, they'd be out of business.
That's how I understood OPEC to be in control of the world oil market.
But that doesn't mean the oil can be shipped to its point of consumption for $10/barrel. When OPEC tries to raise oil prices by cutting production, all they do is sell less oil at the higher price than they would have sold at the lower price. Restricting output in an attempt to raise prices is one of the more idiotic approaches to doing business. If there was a demand for 100,000 widgets in the world and you could produce them for $1 apiece and your competitors could produce them for $2 apiece, why in the world would you produce only 50,000 of them if you are capable of producing all 100,000?