The U.S. shale oil revolution has already proved to the world’s major oil producers that it is worth counting with. This obvious fact was recently recognized by OPEC Secretary General Abdalla Salem El-Badri. He says that American companies engaged in producing shale oil are capable to boost their production under any circumstances. With that being said, if that’s the case, they are going to be able to cover any oil export deficit should it occur as the result of shrinking oil production by other exporters out there. This means that the USA may become the nation preventing oil prices from recovering even if OPEC and other exporters start reducing their production to reduce the oversupply and make the prices recover.
Within the framework of his speech made in Huston at the World Oil and Gas Conference, El-Badri highlighted the fact that the cartel is now uncertain about the way the members are going to act under such circumstances full of uncertainty. The this is that OPEC has never encountered such a flexible source of oil exports capable of reacting to any changes in a matter of days.
It is also interesting to note that on February 16th, Qatar hosted a summit with Russia, Saudi Arabia, Kuwait, Qatar and Venezuela as its participants. They agreed to freeze their oil production volumes at the level of January 11th. Still, the participants agreed to make such changes only if the other OPEC members do the same. With that being said, this agreement is some kind of a crucial step aimed at showing others that the exporters are willing to act first and ready for an open dialog. They are setting an example for other oil exporters out there.
However, Iran seems to be reluctant to make such a step. The Iranian government claims that they don’t find it logical to curb their oil production, which is why they are not going to to join the agreement that was reached a couple of weeks ago between Russian and several OPEC members. More specifically, some Iranian officials say that many OPEC members boosted their oil production while Iran was under Western sanctions. Now, when the sanctions are canceled, Iran is also going to catch up with OPEC fellows.
It happens so that the mentioned agreement contradicts Iran’s ambitious plans, which is why Iran is not going to join it even though other OPEC members support the agreement. In particular, Kuwait and some other OPEC members are reported to have agreed to cap their oil production. Still the expert community is skeptical about the agreement since the participants have to talk the remaining 10 OPEC members into signing the agreement as well. Iran is on the list and the authorities are said to be reluctant to make such a step as they are trying to regain the lost ground by any means.
