BP chief likens US oil sector to ‘market without brain’

The US shale oil sector needs to sell at between $40 to $60 a barrel to make money and moves to stop operating rigs quickly when they become unprofitable. (Getty Images)
Updated 27 February 2019
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BP chief likens US oil sector to ‘market without brain’

  • Bob Dudley: The US is the only country that completely responds to market signals ... like a market without a brain. It just responds to price signals
  • Dudley: Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the US shale market responds purely to oil prices

LONDON: BP Chief Executive Bob Dudley described the high-pace US shale oil sector as a “market without a brain” that, unlike Saudi Arabia and Russia, only responds to market signals.
The US shale oil sector, which has helped the country to become the world’s biggest oil producer last year, needs oil to sell at between $40 to $60 a barrel to make money and moves to stop operating rigs quickly when they become unprofitable.
In its biggest deal in around 20 years, BP bought US assets from BHP for $10.5 billion last year.

 

 “The US is the only country that completely responds to market signals ... like a market without a brain. It just responds to price signals,” Dudley told the International Petroleum Week conference in London.
“Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the US shale market responds purely to oil prices.”
Not least in reaction to surging US output, Russia joined a global supply cut deal with the members of OPEC to prop up prices.
Overall US crude production has climbed to a weekly record of 12 million barrels per day (bpd), the US Energy Information Administration said in its latest report, mainly due to increases in the Permian and the Bakken in North Dakota.
Crude stockpiles have built for a fifth straight week to their highest since October 2017 and exports hit an all-time high.

FASTFACTS

12m - Overall US crude production has climbed to a weekly record of 12 million barrels per day (bpd).


Gulf countries strengthen oil coordination amid tensions: Kuwait

Updated 20 May 2019
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Gulf countries strengthen oil coordination amid tensions: Kuwait

  • ‘It is normal amid this escalation that Kuwait and the Gulf Cooperation Council countries take these steps’
  • Kuwait was in ‘constant contact’ with its ally, the US

KUWAIT CITY: Kuwait’s deputy foreign minister said countries in the Gulf have strengthened coordination to provide oil to global markets amid increased regional tensions.
“It is normal amid this escalation that Kuwait and the Gulf Cooperation Council (GCC) countries take these steps,” Khalid Al-Jarallah told reporters late Sunday on the sidelines of a Ramadan sit-down organized by the Iraqi embassy.
“There is cooperation and coordination between Kuwait and the Gulf countries to provide guarantees for oil tankers and continuous supply of energy to global markets.”
Jarallah’s comments come days after sabotage attacks against tankers in highly sensitive Gulf waters and the bombing of a Saudi pipeline — the latter claimed by Iran-aligned Yemeni rebels.
Both attacks targeted routes built as alternatives to the Strait of Hormuz, the conduit for almost all Gulf exports.
The US Fifth Fleet headquartered in Bahrain said the six-nation Gulf Cooperation Council began “enhanced security patrols” Saturday in international waters, in “tight coordination with the US navy.”
Iran has repeatedly threatened to close the strait in case of war with the United States, which earlier this month announced it was sending an aircraft carrier and strike group to the region.
Kuwait’s deputy foreign minister said “tension was escalating quickly” but he remained hopeful.
He added Kuwait was in “constant contact” with its ally, the US.
On Saturday, OPEC giant Saudi Arabia called for urgent meetings of the GCC and the Arab League to discuss recent “aggressions and their consequences” in the region.
The two summits are scheduled to be held in Makkah on May 30.
Jarallah welcomed the kingdom’s invitation, saying Kuwait was keen to take part in discussions on issues “potentially dangerous” to the region.