HOUSTON, Texas — From the very depressed state of global oil prices that had gone rock bottom to US$30 per barrel and then the production freeze collaboration of global oil producers already getting headway into arresting further price fall, consumers are being cautioned that market developments would still be up there with surprises.
As noted by Mohammad Sanusi Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC) in a briefing with global journalists at CERAWeek, the higher-than-expected production from the shale basins of North America had been one of the market surprises that will be impacting on the oil market’s fundamentals.
“When we talked about what the projection would be for 2018 – 98% of them (shale producers) called for a much lower expansion figure in terms of supply, but even the industry here was sort of taken aback by this expansion in supply,” Barkindo said.
He emphasized the phenomenal rise in shale output had been “due to factors at play in the most efficient and prompt manner, remarkable improvement in the technology of fracking (hydraulic fracturing) and the continued ability to attract funding from Wall Street and ability to rationalize cost.”
Amid such recent developments though, OPEC is still non-committal on any prospective extension of its six-month agreement with non-OPEC producers led by Russia on committed output cut of up 1.2 million barrels per day.
Barkindo reckoned “the stability of the oil market is not only good for OPEC, it’s not only good for non-OPEC but it’s also good for the players of the shale basins.”
OPEC has been extending the ‘bridges of dialogues’ with all other constituencies of the global oil sector as part of the overarching effort to contain cycles of pricing volatilities in the world market.
And with these three core market players fusing together, the world of oil may continually see the strapping force of their ‘triangle’ when it comes to shaping the global oil market’s future.
The OPEC secretary general stressed “they (shale producers) have seen it themselves that they’ve been benefiting from the joint decisions taken by OPEC and non-OPEC to restore stability of these dislocations that have extremely grown longer than those cycles — resulting in the filing of bankruptcies of more than 200 companies and over half a million jobs lost in this industry globally.”
On the forthcoming meeting of OPEC and non-OPEC producers in Vienna this April, he emphasized that they would need to take stock first of the implementation of the production cut as well as assess the market response before they decide on “how we proceed instead of waiting for the expiration of the decision in June and add to the uncertainties and volatilities of markets.”
Barkindo added it is to the interest of markets and the industry “to continue to dialogue; to exchange notes, to compare projections and experiences we’ve had from this cycle.”