It’s been a busy few days at CERAWeek in Houston, where The Wall Street Journal has a team of editors and reporters covering the most influential annual oil conference in the U.S. Saudi Arabia’s oil minister spoke, OPEC’s secretary general broke bread with rival American producers and U.S. shale-oil companies are finally getting some recognition as a permanent fixture in the global industry.
Here’s a rundown of the major news from Houston.
SAUDI OIL MINISTER: OPEC REMAINS A STABILIZING FORCE
Saudi Arabia delivered a message at CERAWeek: Don’t expect the Saudi’s to save the oil market alone.The kingdom has shouldered the brunt of production cuts agreed to last year among the 13 nation OPEC cartel and 11 other producers, designed associated with a deal by OPEC and external oil producers to eliminate about 2% of global supply. The output deal helped send crude prices up 20%. Saudi energy minister Khalid al-Falih said OPEC will look at inventory levels in May as it evaluates whether to extend the production cut into the second half of the year. In reference to recent shale oil developments, Mr. Falih He warned an audience full of American producers who have benefited from the production cuts to not fall prey to “wishful thinking that OPEC or the kingdom will underwrite the investments of others.”
“Saudi Arabia will not allow itself to be used by others,” said Mr. Falih.
PRODUCTION CUTTERS DEFEND THEIR COMMITMENTS
Ministers from countries including Russia, Iraq and Saudi Arabia said they were following through on production-cut commitments amid signs the coalition is fraying at the edges, writes Sarah Kent. For instance, Russia has only fulfilled about a third of its pledge to reduce supply, but the country’s energy minister said Tuesday that Moscow is “fully committed” to slashing all 300,000 barrels a day it promised.
OPEC: U.S. SHALE IS HERE TO STAY
OPEC’s chief said the global economy could have been worse off without shale-oil output in the U.S., report Lynn Cook and Miguel Bustillo.
The flood of supplies from American producers over the past sent the oil market into a tailspin, but it also provided new production that was needed to meet demand, said Mohammad Barkindo, the secretary-general of OPEC at CeraWeek. “We only wish it was done in an orderly fashion that did not trigger this severe cycle that we’re still battling to come out of,” said Mr. Barkindo.
OPEC RECONCILING WITH AMERICA
OPEC’S message in Houston has been conciliatory toward U.S producers that it once counted as upstart rivals. Energy scholar Daniel Yergin, who is vice chairman of energy research at IHS Markit, told the Journal that OPEC is accepting shale producers as a major source of oil now much like it came around to the discovery of new supplies from the North Sea in the 1970s. “It’s not so much ‘us-versus-them’ any more, but a watchful but peaceful coexistence,” he said. For OPEC’s part, Mr. Barkindo said: “For the record, we didn’t have any war” with shale producers.
OPEC BREAKS BREAD WITH SHALE PRODUCERS
Mr. Barkindo took his rapprochement with shale producers to the next level, bonding with them over dinners on Sunday and Monday nights in Houston.
“Mr. Barkindo held forth about the Organization of the Petroleum Exporting Countries’ sometimes tense negotiations to hammer out an agreement to cut oil production, according to people at the meeting,” the Journal reported. “Mr. Barkindo assured shale executives that OPEC didn’t want to put them out of business. And OPEC’s top official had an admission for his audience.” “We did confess that we do not have sufficient understanding of how they operate and their impact on us,” he said later.
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Headline crude prices for the week beginning 16 September 2019 – Brent: US$69/b; WTI: US$63/b
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