Do you aware?
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[Saudi Oil Minister Kahlid Al-]Falih promised that the Kingdom [of Saudi Arabia] would not add more barrels to an already flush market. “There is no reason to expect that Saudi Arabia is going to go on a flooding campaign,” he said.There had been some concern about that. At the April meeting of OPEC+Russia, the Saudis said they would only agree to freeze their output if the Iranians did too. Iran has no intention of doing so; Minister Bijan Zanganeh said there was no reason why Iran shouldn’t be able to increase production from 3.8 million bpd now to 4.7 million.But now it’s looking increasingly like the Saudis and Iranians can smoke the peace pipe, at least when it comes to divvying up market share. Al-Falih appeared ready to declare victory in the battle for market share that the Saudis initiated in late 2014. By holding their own output steady, OPEC has brought a halt to the shale boom and has also potentially scared off a whole generation of exploration into the deepwater and arctic. “I believe that the strategy that OPEC adopted in 2014 has indeed succeeded,” Al-Falih said. “We see supply and demand converging.”
No wonder those OPEC ministers are happy. Their plan worked. They responded to interlopers by refusing to cut output. The resulting low prices have mostly eliminated the market oversupply and permanently impaired rivals’ capital. With prices still too low to incentivize renewed interest in places like the deepwater, Arctic or lesser shale plays, Iran and Iraq are now free to add to their market share. Contrary to rumors, it looks like OPEC didn’t die after all.
Wrath got that work done
