With the United States, "for the record, there has never been any war" on oil prices and OPEC indeed looks benignly on the American shale revolution, which has meant the market has been able to make up for lost production in Libya, Iran and in Nigeria. Thus the secretary general of the oil cartel, Mohammad Barkindo at CeraWeek. "Without US shale we would have been in deep crisis - he observed – we only hope that things continue in an orderly fashion, without precipitating this severe cycle which we are trying hard to get out of." OPEC will indeed also take the US production levels into account when on May 25 in Vienna, it will decide whether to extend for another six months the cut of 1.8 million barrels per day decided last December, along with eleven countries not participating in oil cartel led by Russia. "Our decision is a declaration of cooperation of 24 producing countries and the US are not part of this - Barkindo stated - and hence at the next summit in Vienna, on May 25, it will be these 24 countries that decide how things are to proceed. Obviously we will consider what the other principal producers are doing."
THE MEETING WITH US PRODUCERS
Barkindo reported he met American companies in the industry and investment fund representatives as well as officials of the new Trump administration on the sidelines of CeraWeek. "We are involving American companies and we expect this dialogue to continue," he said. "The presence at the meetings of some of the current administration’s advisors has I think been helpful. The US companies are on our same platform. They fully support what the OPEC and non-OPEC producers have done to stabilize the market. They don’t need convincing - he insisted - many companies are under pressure and are only continuing thanks to private equity funds, that are becoming important players in the market".
THE WARNING OF SAUDI MINISTER AL-FALIH
OPEC will intervene on the market "only for a limited period of time". This the word of the Saudi energy minister and president of Saudi Aramco, Khalid Al-Falih, on the stage of CeraWeek. Al-Falih underlined how the historic agreement between the countries of the cartel and non-OPEC producers for a total production cut of 1.8 million barrels per day has shown a strong alignment among producers. Saudi Arabia, however, remains convinced that interventions aimed at alleviating the impact of financial crises or excess supply should be temporary. For the Saudi minister action is only needed to speed up the rebalancing, then it is a question of allowing the free market to do its job. "History has shown that interventions in response to structural changes are not effective. I think that the organization has learned this lesson - he observed – which is why Saudi Arabia does not support OPEC's actions to alleviate the impact of longterm structural imbalances. In particular Al-Falih indicated the American shale production that has "flooded" the market, contributing to more than two years of falling market prices. As for the possibility of extending production cuts for a further 6 months, i.e. until the end of the year, Al-Falih said that a decision has yet to be taken. "In light of the improving fundamentals, boosted by cooperation between OPEC and non-OPEC countries, I am optimistic as to the global outlook for the coming weeks and in the coming months," he declared. "My optimism, however, should not induce investors into what I would call irrational exuberance, thinking that OPEC or the Kingdom will support the investment of others while bearing the brunt of their actions," he warned, with a clear reference to the United States' continued increase in production.