• 5 minutes Iran Says It Arrested 17 CIA Spies, Some Sentenced To Death
  • 9 minutes Will We Ever See 100$+ OIL?
  • 13 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 2 hours Iran Loses $130,000,000 Oil Revenue Every Day They Continue Their Games . . . .Opportunity Lost . . . Will Never Get It Back. . . . . LOL .
  • 1 hour How is E&P of Marginal Oil on the UKCS Similar to the Shale Oil Operations in the US?
  • 7 hours Oil Giant Saudi Arabia Is Set to Start First Wind-Power Plant
  • 4 hours So You Think We’re Reducing Fossil Fuel? — Think Again
  • 30 mins Renewables provided only about 4% of total global energy needs in 2018
  • 2 hours Berkeley becomes first U.S. city to ban natural gas in new homes
  • 6 hours EIA Reports Are Fraudulent : EIA Is Conspiring With Trump To Keep Oil Prices Low
  • 2 hours N.Y. Governor Signs Climate Bill
  • 17 hours First limpet mines . . . . now fly a drone at low altitude directly at U.S. Navy ship. Think Iran wanted it taken out ? Maybe ? YES
  • 16 hours Today in Energy
  • 13 hours Which is a better domain name for OAPEC?
  • 16 mins U.S. Administration Moves To End Asylum Protections For Central Americans
  • 5 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

More Info

Can U.S. Shale And OPEC Find Common Ground?

refinery

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 in the upcoming summit. Bloomberg has been predicting an OPEC-shale war since late last year. And now, as Reuters boasts peace, CNBC, citing industry experts, is simultaneously reporting that the upcoming meeting “could be one of the most fractious in recent years with competing interests and demands at play.”

The conflict, however, might not come from the U.S. shale leaders, the usual suspects, but from within OPEC’s own ranks. While Saudi Arabia and Russia are ready to increase output after years of production caps, other major players, including Iran and Iraq, are staunchly against the move.

Also setting the scene for a tense summit, world leaders like U.S. President Donald Trump have lashed out against high oil prices, giving OPEC the blame for contributing to economic hardships. To make geopolitical matters even more complicated, U.S. Treasury Secretary Steven Mnuchin has been pushing for higher production in preparation for sanctions against Iran. In addition, OPEC is expecting major supply shortages from Venezuela, due to their current political and economic crisis. The nation has been an invaluable producer in the past.

While U.S. shale leaders may want to make nice with OPEC in a common interest to stabilize crude prices, this is much easier said than done. U.S. shale producers are legally prohibited from coordinating their output due to antitrust laws. This makes it exceedingly difficult to work with each other and with OPEC in order to curb volatility in market pricing.

Despite major bureaucratic hurdles and OPEC infighting, everyone at the upcoming June 22 summit will be united in at least one common front: a desperate need to ensure that consumers stick with fossil fuels. In the age of Elon Musk, we may be just one price spike away from an electric takeover.




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play