• 3 minutes CoV-19: China, WHO, myth vs fact
  • 6 minutes Trump reinvented tariffs and it worked
  • 9 minutes IEA Sees First Global Oil Demand Drop in a Decade on Coronavirus
  • 12 minutes Question: Why are oil futures so low through 2020?
  • 21 hours "For the Public's Interest"
  • 4 hours Don't sneeze. Coronavirus is a threat to oil markets and global economies
  • 1 hour Natural Gas from Cow Poop Used to Save the Environment and Help Farmers
  • 10 hours Coronovairus, Phase One Agreement, Lower for Longer
  • 11 hours Weekly U.S. Imports of Crude Oil. No, the U.S. is NOT oil & gas self-sufficient.
  • 4 hours Is Pete Buttigieg emerging as the most likely challenger to Trump?
  • 1 day China's Dreams of World Leadership are Fading
  • 19 mins Is cheaper plastics feedstock on the horizon?
  • 1 day Cheap natural gas is making it very hard to go green
  • 1 day Peak Shale Will Send Oil Prices Sky High
  • 1 day Has Trump put the USA at the service of Israel?
  • 1 day Europe’s Green Deal: Same Hysteria, Same Destruction
Alt Text

Turkey’s Plan To Sabotage Israeli Gas

Turkey’s recent aggressive foreign policy…

Alt Text

Do Oil Drillers Need A New Business Model?

Exploration and production companies in…

Precise Consultants

Precise Consultants

’Precise Consultants is a London based technical recruitment consultancy that supplies specialist personnel to the offshore oil and energy industry. The company was founded by…

More Info

Premium Content

Is The Oil Price War Finally Over?

Let’s just hope it sticks. You see, chaps, the devil’s in the detail and the detail isn’t going to be agreed on until November 30th. As The Guardian put it, “OPEC seems to have been taking lessons from EU summits. It has agreed that something needs to be done but has put off until another day the rather more difficult task of getting its fractious membership to decide what they should be.”

But until it’s un-done, it’s done and the markets are a much happier place to be. Oil prices settled up nearly 6 percent when the announcement was made. The infectious good spirit was enjoyed in Wall Street too where its index of U.S. energy stocks rose 4 percent – the best one-day gain since the start of the year. Brent crude rose 5.9 percent per barrel and WTI leapt about the same to $47.05 following the two-day meeting.

It’s an important deal as the Telegraph says, particularly for the energy companies left reeling after prices collapsed from a June 2014 high of $115 per barrel to $27.88 in January.

The agreement in principle is that output would be limited to between 32.5m bpd and 33 million bpd. Current output is 33.24 million bpd. “This is the end of the production war – OPEC claims victory!” cheered Phil Flynn, an analyst at Price Futures Group in Chicago. He told Reuters, “The cartel proved that it still matters, even in the age of shale.”

It’s more likely, however, a reluctant acknowledgement of a very simple truth – Saudi Arabia’s oil policy isn’t working. The Wall Street Journal says people ‘familiar with this matter’ (sounds deliciously creepy doesn’t it?) reported that the Kingdom’s energy minster Khalid al-Falih’s attention was drawn to an OPEC prediction that a global glut was likely to remain throughout 2017. Faced with the consequences of its policy to date – introducing unpopular domestic austerity measures and a decision by the U.S. Senate to allow 9/11 victims to sue the Kingdom for its potential involvement which saw Saudi’s currency plunge to its lowest level in four months – perhaps it decided to lick its wounds and live to fight another day. Related: Oil Leak Forces BP To Shut Platform In North Sea

What is very interesting is the thaw in Saudi Arabian/Iranian relations. Bijan Zanganeh didn’t even turn up to the last meeting, which prevented a deal being struck, insisting at home that Iran would support any deal to cut production that OPEC made, just so long as they didn’t expect Iran to act as well so soon after sanctions were lifted. However, after the meeting he told reporters, “OPEC made an exceptional decision today…After 2 ½ years OPEC reached consensus to manage the market.”

An obscure commitment made by al-Falih may yet prove to be the sticking point in this international love-in. He conceded that Iran as well as Nigeria and Libya could produce “at maximum levels that make sense”. Just what that level that makes sense is, remains unclear.

On the other side of the fence are the frackers, who have withstood everything and the kitchen sink that was tossed their way. This move signifies that OPEC now realises it is no longer the force it once was. But it is better to share a piece of the cake than have none.

By Precise Consultants

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage




Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News