Oil prices fell dramatically from a high of around $114 a barrel in June 2014 to a low of around $27 a barrel in January 2016 amid a sharp imbalance in supply and demand.
The fall in prices was largely attributed to weaker global demand amid a supply glut from the likes of the U.S. which has experienced what’s known as the ‘shale revolution’ which has made it the largest oil producer in the world, as well as major producers Saudi Arabia and Russia. The fall in oil prices hit producing nations hard, especially in the U.S., whose producers have higher production costs.
OPEC members and a group of non-OPEC producers led by Russia agreed in late 2016 to curb their output in a bid to balance supply and demand, and prices, in an alliance now known as “OPEC Plus.”
The deal, which remains in place, is seen to have worked with benchmark Brent crude futures currently trading at $65.97 a barrel and West Texas Intermediate (WTI) at $56.69 per barrel on Thursday. The U.S. did not take part in any output cuts but has benefited from a rise in prices as a result. Nonetheless, President Trump continues to criticize OPEC, saying prices are too high.
Saudi Energy Minister Khalid al-Falih told CNBC Wednesday that OPEC was “taking it easy.” Despite U.S. criticism, Barkindo said U.S. shale oil had been invaluable in its contributions to global oil supplies.
“Without this shale revolution we’ve seen in the U.S. the world would have been in major, major energy chaos,” he said. But he said it was vital to maintain OPEC’s deal with non-OPEC nations to maintain oil market stability – something the U.S. desired.
“Thanks to the shale revolution in the U.S. we have been able to maintain these supplies and meet current demand. What is needed now is for us to continue this relationship with the non-OPEC (producers) in order to sustain the relative, and fragile, market stability that we have been able to achieve,” he said.
Barkindo noted wrily that despite the criticism from Trump, “without OPEC, the U.S. would probably have created another organization to do exactly the same.”