Two years ago, when Saudi Arabia launched an unprecedented campaign to crush high-cost oil producers, in the process effectively putting an end to the OPEC cartel (at least until last year’s attempt to cut production), it made a bold bet that U.S. shale producers would be swept under when the price of oil tumbled, leading to a tsunami of bankruptcies, as well as investment and production halts. To an extent it succeeded, but where it may have made a glaring error is the core assumption about shale breakeven costs, which as we reported throughout 2016 , were substantially lower than consensus estimated. In his latest note, BofA’s Francisco Blanch explains not only why a drop in shale breakeven costs is what is currently the biggest wildcard in the global race to reach production ” equilibrium “, but also why U.S. shale oil production could surge in the coming years, […]