Titans of oil world meet in Houston after two-year price war

The biggest names in the oil world come together this week for the largest industry gathering since the end of a two-year price war that pitted Middle East exporters against the firms that drove the shale energy revolution in the United States.

When OPEC in November joined with several non-OPEC producers to agree to a historic cut in output, the group called time on a fight for market share that drove oil prices to a 12-year low and many shale producers to the wall.

Oil prices are about 70 percent higher than they were the last time oil ministers and the chief executives of Big Oil met in Houston a year ago at CERAWeek, the largest annual industry meet in the Americas.

The ebullience as both sides enjoy higher revenues will be a welcome relief from the gloom of a year ago, near the depths of the price war.

"The oil market has been rebalancing and the powerful forces of supply and demand have been working," said Dan Yergin, vice chairman of conference organizer IHS Markit and a Pulitzer Prize-winning oil historian.

"The mood will be different this year."

The capital of the U.S. oil industry Houston is emerging from the price war sporting new downtown skyscrapers and the lingering glow from hosting last month's Super Bowl.

OPEC's November deal, the prospects for its continuation and rosier investment prospects for the industry will dominate the discussions, with state-run producers and Big Oil both positioning themselves for an upturn in the notoriously cyclical business.

Twice as many OPEC ministers as a year ago - plus Russia and India's top energy officials - will be in the capital of the U.S. energy industry.

Saudi Arabia's energy minister Khalid al-Falih, who assumed his role last spring and whose country has contributed the largest share of OPEC output curbs, addresses the meeting on Tuesday.

Russian Oil Minister Alexander Novak, who was key to bringing non-OPEC countries on board to cut in tandem with OPEC, will speak on Monday

Chief executives from five hard-hit international oil producers - BP, Chevron Corp, Exxon Mobil Corp, Royal Dutch Shell and Total - will be listening closely to the ministers' comments to see if those production curbs will be extended past their June expiration.

The meeting won't be without simmering tension between U.S. oil producers and OPEC. One of the biggest questions in the oil market is how quickly and how much shale producers will boost output. A sharp rise from the U.S. shale patch could undo the Saudi-led deal to reduce the global oil glut.

Shale activity is humming in the hottest U.S. oilfield, the Permian Basin, a 75,000 square mile expanse in West Texas. The U.S. land drilling rig count is up 55 percent in the past 12 months, and many of them are in the Permian.

"It's exciting now to see the rig count rising and business activity picking up again," said Peter Boylan, chief executive of Cypress Energy Partners LP, an oilfield service provider with operations in Texas and North Dakota.'


culled from reuters