OPEC and US shale may need a relationship counsellor.
After first ignoring it, later worrying about it and ultimately launching a price war against it, Opec has now concluded it doesn’t know how to coexist with the US shale oil industry.
“Shale oil in the United States, I don’t know how we are going to live together,” Abdalla Salem El-Badri, Opec secretary-general, told a packed room of industry executives from Texas and North Dakota at the annual IHS CERAWeek meeting in Houston.
Opec, which controls about 40 per cent of global oil production, has never had to deal with an oil supply source that can respond as rapidly to price changes as US shale, Mr El-Badri said. That complicates the cartel’s ability to prop up prices by reducing output.
“Any increase in price, shale will come immediately and cover any reduction,” he said.
The International Energy Agency earlier on Monday gave Opec reason to worry about shale oil, saying that total US crude output, most of it from shale basins, will increase by 1.3 million barrels a day from 2015 to 2021 despite low prices. While US production from shale is projected to retreat by 600,000 barrels a day this year and a further 200,000 in 2017, it will grow again from 2018 onward, the IEA said.
“Anybody who believes that we have seen the last of rising” US shale oil production “should think again,” the IEA said in its medium-term report.
John Hess, chief executive of one of the largest lease-holders in North Dakota’s Bakken shale region, said shale might not respond as quickly as Opec fears. There are logistical hurdles involved with returning enough rigs and workers back to the oil patch to start growing production again, in addition to financial hurdles.
“The balance sheets of shale producers are in disrepair,” said Mr Hess, whose company recently reported its first annual loss in 13 years. “They’ve got to heal their balance sheets before they will start investing again.
Opec launched a price war against US shale and other high-cost producers, including Canadian oil sands and Brazilian deep-water oilfields, in November 2014 by not reducing output despite a global oversupply. Since then, oil prices have plunged by more than half, hitting a 12-year low of about $26 on February 11.
In a rare admission that the policy hasn’t worked out as planned, Mr El-Badri said that Opec didn’t expect oil prices to drop this much when it decided to keep pumping near flat-out.
Opec’s strategy began to shift last week, when the oil ministers of Saudi Arabia and Russia agreed to freeze their output at the January level, provided other oil-rich countries joined. Mr El-Badri said the new policy will be evaluated in three to four months before deciding whether to take other steps.
“This is the first step to see what we can achieve,” he said. “If this is successful, we will take other steps in the future.” He refused to explain what steps Opec could take.
Mr El-Badri said low oil prices have caused companies to cut too much spending on developing new output, which could plant the seed for “a very high price” in the future.
“The concern is no investment now, no supply in the future. It’s as simple as that,” he said. “If there’s no supply coming to the market, prices will go up.”
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Abu Dhabi traffic facts
Drivers in Abu Dhabi spend 10 per cent longer in congested conditions than they would on a free-flowing road
The highest volume of traffic on the roads is found between 7am and 8am on a Sunday.
Travelling before 7am on a Sunday could save up to four hours per year on a 30-minute commute.
The day was the least congestion in Abu Dhabi in 2019 was Tuesday, August 13.
The highest levels of traffic were found on Sunday, November 10.
Drivers in Abu Dhabi lost 41 hours spent in traffic jams in rush hour during 2019
Company Profile
Company name: Hoopla
Date started: March 2023
Founder: Jacqueline Perrottet
Based: Dubai
Number of staff: 10
Investment stage: Pre-seed
Investment required: $500,000
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
TWISTERS
Director: Lee Isaac Chung
Starring: Glenn Powell, Daisy Edgar-Jones, Anthony Ramos
Rating: 2.5/5
Bundesliga fixtures
Saturday, May 16 (kick-offs UAE time)
Borussia Dortmund v Schalke (4.30pm)
RB Leipzig v Freiburg (4.30pm)
Hoffenheim v Hertha Berlin (4.30pm)
Fortuna Dusseldorf v Paderborn (4.30pm)
Augsburg v Wolfsburg (4.30pm)
Eintracht Frankfurt v Borussia Monchengladbach (7.30pm)
Sunday, May 17
Cologne v Mainz (4.30pm),
Union Berlin v Bayern Munich (7pm)
Monday, May 18
Werder Bremen v Bayer Leverkusen (9.30pm)
Women’s T20 World Cup Qualifier
UAE fixtures
25 April – Ireland v UAE*
27 April – UAE v Zimbabwe**
29 April – Netherlands v UAE*
3 May – UAE v Vanuatu*
5 May – Semi-finals
7 May – Final
UAE squad: Esha Oza (captain), Al Maseera Jahangir, Avanee Patel, Heena Hotchandani, Indhuja Nandakumar, Kavisha Kumari, Khushi Sharma, Lavanya Keny, Mehak Thakur, Rinitha Rajith, Samaira Dharnidharka, Siya Gokhale, Suraksha Kotte, Theertha Satish, Vaishnave Mahesh.
*Zayed Cricket Stadium
**Tolerance Oval
The Specs
Engine: 1.6-litre 4-cylinder petrol
Power: 118hp
Torque: 149Nm
Transmission: Six-speed automatic
Price: From Dh61,500
On sale: Now
Dengue fever symptoms
High fever (40°C/104°F)
Severe headache
Pain behind the eyes
Muscle and joint pains
Nausea
Vomiting
Swollen glands
Rash
The Boy and the Heron
Director: Hayao Miyazaki
Starring: Soma Santoki, Masaki Suda, Ko Shibasaki
Rating: 5/5
The specs+
Engine: 2x201bhp AC Permanent-magnetic electric
Transmission: n/a
Power: 402bhp
Torque: 659Nm
Price estimate: Dh200,000
On sale: Q3 2022
Kill
Director: Nikhil Nagesh Bhat
Starring: Lakshya, Tanya Maniktala, Ashish Vidyarthi, Harsh Chhaya, Raghav Juyal
Rating: 4.5/5
Company profile
Company name: Ogram
Started: 2017
Founders: Karim Kouatly and Shafiq Khartabil
Based: Dubai, UAE
Industry: On-demand staffing
Number of employees: 50
Funding: More than $4 million
Funding round: Series A
Investors: Global Ventures, Aditum and Oraseya Capital
Most polluted cities in the Middle East
1. Baghdad, Iraq
2. Manama, Bahrain
3. Dhahran, Saudi Arabia
4. Kuwait City, Kuwait
5. Ras Al Khaimah, UAE
6. Ash Shihaniyah, Qatar
7. Abu Dhabi, UAE
8. Cairo, Egypt
9. Riyadh, Saudi Arabia
10. Dubai, UAE
Source: 2022 World Air Quality Report
MOST POLLUTED COUNTRIES IN THE WORLD
1. Chad
2. Iraq
3. Pakistan
4. Bahrain
5. Bangladesh
6. Burkina Faso
7. Kuwait
8. India
9. Egypt
10. Tajikistan
Source: 2022 World Air Quality Report
The biog
Family: He is the youngest of five brothers, of whom two are dentists.
Celebrities he worked on: Fabio Canavaro, Lojain Omran, RedOne, Saber Al Rabai.
Where he works: Liberty Dental Clinic
Company Profile
Company name: Namara
Started: June 2022
Founder: Mohammed Alnamara
Based: Dubai
Sector: Microfinance
Current number of staff: 16
Investment stage: Series A
Investors: Family offices
The years Ramadan fell in May
Switching sides
Mahika Gaur is the latest Dubai-raised athlete to attain top honours with another country.
Velimir Stjepanovic (Serbia, swimming)
Born in Abu Dhabi and raised in Dubai, he finished sixth in the final of the 2012 Olympic Games in London in the 200m butterfly final.
Jonny Macdonald (Scotland, rugby union)
Brought up in Abu Dhabi and represented the region in international rugby. When the Arabian Gulf team was broken up into its constituent nations, he opted to play for Scotland instead, and went to the Hong Kong Sevens.
Sophie Shams (England, rugby union)
The daughter of an English mother and Emirati father, Shams excelled at rugby in Dubai, then after attending university in the UK played for England at sevens.
MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90+4')
Red card: Rodrigo Bentancur (Juventus)
EMIRATES'S REVISED A350 DEPLOYMENT SCHEDULE
Edinburgh: November 4 (unchanged)
Bahrain: November 15 (from September 15); second daily service from January 1
Kuwait: November 15 (from September 16)
Mumbai: January 1 (from October 27)
Ahmedabad: January 1 (from October 27)
Colombo: January 2 (from January 1)
Muscat: March 1 (from December 1)
Lyon: March 1 (from December 1)
Bologna: March 1 (from December 1)
Source: Emirates
Try out the test yourself
Q1 Suppose you had $100 in a savings account and the interest rate was 2 per cent per year. After five years, how much do you think you would have in the account if you left the money to grow?
a) More than $102
b) Exactly $102
c) Less than $102
d) Do not know
e) Refuse to answer
Q2 Imagine that the interest rate on your savings account was 1 per cent per year and inflation was 2 per cent per year. After one year, how much would you be able to buy with the money in this account?
a) More than today
b) Exactly the same as today
c) Less than today
d) Do not know
e) Refuse to answer
Q4 Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
a) True
b) False
d) Do not know
e) Refuse to answer
The “Big Three” financial literacy questions were created by Professors Annamaria Lusardi of the George Washington School of Business and Olivia Mitchell, of the Wharton School of the University of Pennsylvania.
Answers: Q1 More than $102 (compound interest). Q2 Less than today (inflation). Q3 False (diversification).
A QUIET PLACE
Starring: Lupita Nyong'o, Joseph Quinn, Djimon Hounsou
Director: Michael Sarnoski
Rating: 4/5
TICKETS
Tickets start at Dh100 for adults, while children can enter free on the opening day. For more information, visit www.mubadalawtc.com.
The five pillars of Islam