Related Articles
Leaders
Forward article link
Share PDF with colleagues

Will the new shale surge wreck the rebalancing?

As tight oil soars, producers should welcome the retreat in prices. Cheaper oil is the best chance to bring back market equilibrium

No one should doubt Opec and its partners' success. They have beaten expectations on compliance with the cuts and on the longevity of their deal. But the goal of the exercise—market balance—is receding again. Not until the end of 2018 will equilibrium be reached, the group says. Given how quickly tight oil supply is rising, and Opec's tendency to underestimate it, even that distant target looks optimistic. The market is suddenly out of Opec's control again. Opec shows no wish to deepen the cuts, which would only surrender more customers and further spur rival production. Nor can it abandon the cuts to beat back American drillers, as it tried to do in 2014—the price fall was too painful. It

Also in this section
Opec starts to ease cuts
22 June 2018
The group is seeking to return compliance to 100%, implying a sharp immediate rise in output. But the details are vague
Opec's risky metamorphosis
22 June 2018
The urge to create a bigger producer group based on the Declaration of Cooperation is changing Opec's power politics
Trump's spectre looms over tense Opec meeting
19 June 2018
Russia and Saudi Arabia plan to raise supply. The move will please the US but make for a rocky summit this week