Nowhere is the impact being felt more acutely than in the US shale patch, which relies heavily on a higher oil price environment. OPEC decision, primarily driven by Saudi Arabia, to keep official output figures unchanged means that it is now largely up to non-OPEC producers including US shale companies to trim production.

Indeed, many contend that the cartel’s move to keeping production quota unchanged mostly targets the US shale oil producers, who may find it hard to continue drilling amid lower oil prices.

Oil prices have fallen 12% since the OPEC member nations agreed to keep its production quota of 30 million barrels of oil per day last week. Benchmark Brent crude fell to the lowest level in five years yesterday to $US67.53/barrel, while US benchmark West Texas Intermediate also slipped to a five-year low of $63.72/bbl before recovering.

As oil prices search for a bottom, output economics is being recalibrated with major revisions likely for 2015 E&P budgets across the world in line with the new price environment. For countries that rely on oil revenue, a sharply lower oil price scenario means potentially tougher budget measures.

While larger international oil companies have the ability to absorb the price shock, the impact of low prices is being felt most in the shale space.

Analysts say with most US shale oil projects being viable at a break-even price of oil at around $US65-80/bbl, a sustained lower price could wreak havoc on the shale sector. Already, there are signs of a downturn.

Key shale producers such as Continental Resources and Pioneer Natural Resources have trimmed their 2015 drilling plans, while drilling contractor Transocean has booked an impairment of $US2.8 billion, stemming from a lack of demand for its drilling rigs.

Oilfield services company Baker Hughes reported a drop in active rig count to around 1568 rigs in early November, the lowest since August this year. Many expect drilling rigs count to drop further next year.

Industry data shows that new well permits for shale plays in the US have dropped by 15% for November, indicating that shale slowdown may well have started. While permits still remain significantly higher than four years ago when there was an upswing in shale activity, there are signs of drilling activity cooling off.

Experts project the slowdown in new permits to be followed by a further drop in rig counts, which could eventually lead to trimmed production possibly in the second half of next year.

Analysts point out that in many ways US shale could have become a victim of its own success. While a surfeit of shale production has contributed to lower global oil prices, it has also led to a supply glut, spiralling prices down further and in turn making shale projects unviable.