OPEC

Chesapeake solidifies shale role as OPEC sandfly

22 February 2018

The shale producer pumped more crude at lower costs in the last quarter – then sold it for more money. It can partly thank oil cartel OPEC, which has helped prices edge up. The Oklahoma-based driller joins a growing list of little wildcatters that are becoming a big annoyance.

OPEC’s widened tent would still be built on sand

16 February 2018

Oil-exporting countries are working to expand their alliance with Russia and others longer term, the UAE oil minister says. That’s just as production numbers show U.S. drillers are set to pump more oil this year. OPEC’s tent can widen, but it will still face a production gale.

Big Oil’s discipline reinforces shale’s swing role

22 December 2017

OPEC’s restraint has put a floor under the price of crude, but big oil companies will put a lid on it in 2018. Majors worried about oversupply will tighten budgets and focus on areas with quick payback. U.S. shale will be the big beneficiary, reinforcing its global influence.

Saudi needs OPEC cuts to work, but not too well

30 November 2017

The oil cartel agreed to extend cuts until the end of 2018. Its moderation has drained inventories and lifted prices. Further cuts won’t boost prices enough to balance Saudi’s budget. Then again, that gives the crown prince a reason to continue with his challenging reforms.

Only Russia can make OPEC great again

23 May 2017

Moscow is giving the cartel more pricing clout. A mooted deal to extend output cuts and drain global crude stockpiles can only succeed with the continued support of the world’s biggest crude producer. With U.S. drillers recovering, it may be time to make the alliance permanent.

OPEC caught in vicious Permian cycle

19 May 2017

As President Trump heads to Saudi Arabia, the oil cartel looks set to extend production cuts. It may buoy prices and keep drills running. But efficient U.S. wells in the Permian and elsewhere will benefit most, limiting increases. It’ll be hard for OPEC to regain the upper hand.

OPEC’s oil price conundrum requires new bargain

9 May 2017

The cartel’s decision to restrict output has failed to revive prices. Extending the current deal – as Saudi Arabia’s oil minister has hinted – is not guaranteed to drain stockpiles. Making deeper cuts at the expense of market share would do the trick, but could be hard to agree.

Saudi Arabia’s flawed oil plan still the right one

15 March 2017

Cuts to production agreed with OPEC aren’t boosting the value of crude as hoped, or reducing global stockpiles. Shale in the U.S. is recovering too, and prices are moving sideways. The holding pattern is painful, but it’s still better than reversing course and letting oil plunge.

OPEC’s solidarity points to longer production cuts

14 February 2017

The cartel has taken two steps forward and one step back. Compliance with output cuts is narrowing the gap between supply and demand, but it is also encouraging U.S. producers to drill more wells. Sustained higher prices may require even more restraint to keep the market balanced.

Bets against Iraq’s OPEC cuts are premature

10 January 2017

Traders may have jumped the gun betting Baghdad won’t stick to an output deal. The cartel's second-largest producer has little to gain reneging on the pact and could struggle to maintain record shipments without investment. Higher prices help its cause more than extra barrels.

Maduro will survive, just, on Venezuelan tightrope

28 December 2016

The economy is a wreck, but the country's inept leader has probably done enough to avoid being forced from office in 2017, unless by fellow Chavistas. A bond swap and army-led food programs helped. His gutting of institutions, though, risks violence that may yet be his undoing.

OPEC resolve is strong enough to turbo-charge oil

30 November 2016

The cartel’s deal to cut crude output for the first time since 2008 ends its two-year-old policy of putting market share before higher prices. This may be self-defeating if shale production rebounds. But OPEC unity is convincing enough for oil to extend and sustain gains.

OPEC would be unwise to rely on demand to lift oil

29 November 2016

Saudi Arabia has suggested higher global demand may boost oil prices regardless of whether the cartel strikes a deal on Nov. 30 to cut output. That's optimistic. Banking on stronger world growth to soak up excess supply is a dicey strategy when protectionism risks are growing.

Saudi has Trump-shaped reason to reverse OPEC cut

15 November 2016

The new U.S. president may boost oil drilling, snub climate change accords and cancel a sanctions deal with Iran. That would give Saudi Arabia an excuse to back out of the cartel’s shaky pledge to cut output. Though prices would fall, Riyadh would hang on to its market share.

Oil prices are too gloomy on chance of OPEC deal

26 October 2016

Crude prices have wilted after Iraq joined Nigeria, Iran and Libya in seeking exemptions from production cuts. But this need not be the death knell of a deal to reduce output. Even a small reduction to production would balance a market that is now only narrowly oversupplied.

Iran’s upper hand in OPEC could be fleeting

28 September 2016

The Islamic Republic's resistance to an oil deal leaves its rival Saudi Arabia stuck with low prices. Yet that is pushing Riyadh to launch necessary economic reforms, which should make the kingdom more competitive. Iran, despite its current rapid growth, risks falling behind.

Saudi-Russian oil truce more mirage than reality

5 September 2016

Riyadh and the Kremlin make awkward allies. Competing economic and political interests in the Middle East have been hard for both sides to overcome, even for the mutually beneficial goal of higher oil prices. Their latest attempts at a crude truce will probably be only illusory.

Libya is the fly in OPEC’s ointment

31 August 2016

Whether the cartel can push up oil prices depends on Tripoli. Libya’s production is small but unpredictable. Include the war-torn country in any output cap, and other OPEC members may end up forced to produce less. Ignore it, and efforts to rein in production could be wasted.

Kuwait oil selloff success depends on reserves

12 July 2016

A plan to follow Saudi Arabia by partially privatising its state-run oil industry could make sense for OPEC's fifth-largest producer. An IPO would generate needed billions for the government. Maximising proceeds, though, will mean ceding control of the crude still in the ground.

OPEC has an oily blind spot over Brexit

2 June 2016

Britain leaving the EU would present the cartel with a tricky demand problem. Brexit could slow economic growth in Europe and reduce consumption of crude in the world’s third-largest market for fuel. If that happens OPEC may have to cut output, or risk prices falling again.