As OPEC’s June 22 summit rapidly approaches, everything hangs in the balance for the organization’s precarious (to say the least) relationship with United States shale CEOs. But suddenly, for the first time in years, it looks like the two sides of the oil price battle have found some common ground.
According to reporting by Reuters, interviews with analysts, executives and investors have revealed that OPEC and Big Shale are ready to turn over a new lead and work together to maintain control over global supply and demand for crude oil.
While this year’s dramatic rise in crude prices (an increase of more than 40 percent as compared to last year) has meant higher profits across the industry, the high prices threaten to turn people away from fossil fuels. This delicate balance, as well as OPEC’s meeting, come at an important crossroads, as electrictrification becomes more readily accessible around the world.
This won’t be the first meeting between OPEC and U.S. representatives this year. In fact, they’ve already met at least twice. The upcoming June 22 meeting in Vienna, however, is by far the most high-profile of the three. In attendance will be such magnates as Harold Hamm, billionaire founder of shale major Continental Resources Inc, Hess Corp CEO John Hess and Pioneer Natural Resource Co Executive Chairman Scott Sheffield. You can be sure that the need to find a balance between raising profits and threatening demand will be at the top of the agenda.
Since the U.S. oil export ban in 2015, the U.S. crude market exploded, sending nearly 2 million barrels to India, China and other major markets previously dominated by OPEC. This major shift in the industry has left a lot of bad blood between OPEC and U.S. shale, but by the same token, OPEC was put at a negotiative disadvantage, forcing them to be conciliatory to their new rivals.
Hamm, who once erected a granite monument to rising U.S. oil production and domestic energy independence in North Dakota, is now encouraging his fellow shale magnates to follow in OPEC’s footsteps and focus on price over production. Just last month, the shale tycoon even went so far as to address a Saudi Aramco board meeting in Houston, a move unimaginable just a few years ago, due to tensions between the U.S. and OPEC nations.
Despite Reuter’s reporting, not everyone is convinced that OPEC and U.S. shale are ready to turn over a new leaf and play nicely…