Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list

Feature: A swagger in its step, OPEC meets Monday with US shale rivals

Oil | Crude Oil

Trump wants Saudi oil price help, but are relations too damaged?

Natural Gas | Oil

Platts Scenario Planning Service

Oil | Crude Oil | Oil Risk | Petrochemicals | Aromatics | Olefins | Petrochemicals Risk | Polymers | Solvents & Intermediates

S&P Global Platts University London

Oil | Crude Oil

Russia expects 'clean' Urals crude exports via Druzhba to resume Mon: report

Feature: A swagger in its step, OPEC meets Monday with US shale rivals


UAE minister says shale companies owe OPEC thanks

Dinner meeting to happen at CERAWeek conference

OPEC confident demand will absorb shale barrels

London — A year ago, having recently implemented output cuts after throwing in the towel on a bruising market share battle, OPEC convened a headline-grabbing meeting with US shale companies on their home turf to size up the competition as its rebalancing efforts took their first tentative steps.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The two sides will renew acquaintances again Monday night at the CERAWeek conference in Houston, the site of their first meeting, with OPEC having gained some bravado in the 12 months since.

The producer group, along with 10 non-OPEC allies led by Russia, has maintained discipline with its output cuts, defying its many skeptics.

That supply restraint, combined with robust demand in the second half of 2017, has led to a much tighter market and oil prices almost 16% higher than they were at this point last year, even as US shale output has roared back.

It is this success that perhaps led UAE energy minister Suhail al-Mazrouei to declare at the International Petroleum Week conference in February that US shale companies owed OPEC a debt of gratitude.

"If you are a shale producer, who brought you back? It was OPEC," said Mazrouei, who holds the rotating OPEC presidency and will be attending CERAWeek. "The OPEC/non-OPEC agreement has done good for the market and benefitted all world producers."

OPEC officials, however, say that such chest thumping is not on the agenda for Monday's meeting.

Rather, OPEC is likely to reemphasize to the companies that a rising tide lifts all boats in the oil market.

With many US shale operators now being held to higher cash flow standards by their shareholders than previous growth-at-all-costs philosophies, the timing may be right for OPEC to prod them to be more disciplined in their approach.

"It is open dialogue, nothing specific," one OPEC delegate told S&P Global Platts on condition of anonymity. "Cooperation for the betterment of the global market is a win-win."

OPEC would not reveal which companies it has invited to the meeting, and several contacted by Platts either declined to comment or did not respond.

Last year's affair included the likes of ConocoPhillips, Pioneer Natural Resources, Hess and Chesapeake Energy, among others.

Many of them will also attend OPEC's International Seminar in June, a two-day conference with several industry speakers held just before the producer group's meeting in Vienna.

Besides Mazrouei, OPEC ministers from Kuwait, Nigeria, Qatar, Ecuador and Equatorial Guinea, along with Secretary General Mohammed Barkindo, will be in Houston for CERAWeek, according to the conference's program.


OPEC has long struggled to fully understand the new world of US shale production, and engagement with the companies, as well as hedge funds, has been a priority for OPEC Secretary General Mohammed Barkindo, who said after last year's meeting in Houston that he hoped to make it an annual event.

US crude output growth shows no sign of slowing, with producers taking advantage of firmer demand and higher prices to bring rigs back online.

The US Energy Information Administration expects US oil production to average 10.59 million b/d in 2018, which would be the highest-ever annual level, blowing past the previous record of 9.6 million b/d set in 1970.

Analysts with Barclays Capital said in a recent note that several US companies have taken "a more disciplined approach to spending in 2018," and as such have issued more modest production growth guidance, though "most remain robust," with expected growth of more than 20% year-on-year.

While the idea of the US joining OPEC or its production cut alliance remains preposterous due to US antitrust laws, as well as the country's industry make-up of dozens of independent companies, many OPEC ministers say it is important for them to continue dialogue to gain a better mutual understanding of their market outlooks.

"OPEC will need to find a way to engage what I will call non-OPEC America," Nigerian oil minister Emmanuel Kachkiwu said last month at an industry conference in Abuja. "On that platform, there isn't the government to negotiate with. On that platform are private companies, but the fact is that they are oil companies in the US that are busy investing all over the place. So we've got to find a way of engaging them to take joint responsibility on how the market is controlled."

OPEC has maintained that it does not see US shale competitors as head-to-head competitors and that growth in global demand will absorb any increases in US production.

Indeed, OPEC's latest forecast predicts demand growth of 1.69 million b/d, outpacing non-OPEC supply growth of 1.40 million b/d.

As such, US barrels are welcome on the market, OPEC has said, particularly with some of its members, notably cash-poor Venezuela, staring at bleak outlooks.

The International Energy Agency, however, is far less bullish, basically flipping OPEC's forecasts, with demand expected to rise to 1.40 million b/d, while non-OPEC supply expands by 1.70 million b/d.

Behind OPEC's dismissiveness of shale, BNP Paribas analyst Harry Tchilinguirian said he suspects the threat of US producers undermining their market rebalancing endeavors in the coming months is motivating OPEC ministers' push to make permanent their alliance with Russia and the nine other non-OPEC countries involved in their output cut agreement.

The current deal, in which the 24 countries agreed to a combined 1.8 million b/d in cuts to stabilize the market and prop up prices, is set to expire at the end of 2018, and a longer pact involving some kind of market management among the coalition could boost investor confidence.

"In the end, when the current accords conclude, there is a risk that the achievements of producer restraints to date start to unravel in the face of strong US shale oil supply growth in 2018-2019," Tchilinguirian said Tuesday in a note.

--Herman Wang,
--Edited by Maurice Geller,