The financing model underpinning the US shale oil industry is fundamentally different from that of large companies producing predominantly in conventional oil. Small and medium-size independent producers, which dominate the US shale industry, generally have much higher leverage with high levels of debt and hedging. Since its inception, the industry has been characterised by negative free cash flow as expectations of rising production and cost improvements led to continuous overspending in the sector. Over the last few months, the industry as a whole has seen a notable improvement in financial conditions, though the picture varies markedly by company, and the overall health of the industry remains fragile.
In order to try to assess as precisely as possible the developments of shale industry throughout the decade, we identified four distinct phases that have characterised the shale industry since 2010 up to now.
2010-14: The start-up phase
In the 2010-14 period, technology developments and high and stable oil prices triggered a massive investment wave in the US shale sector. Investment more than quadrupled, leading to an eightfold increase in shale oil production, from 0.44 million barrels per day (mb/d) to over 3.6 mb/d – the fastest growth in oil production in a single country since the development of Saudi Arabia’s super-giant oilfields in the 1960s.
However, the growth came with a huge bill. The sector as a whole generated cumulative negative free cash flow of over USD 200 billion over those five years. Throughout this phase, companies were forced to rely extensively on external sources of financing, predominantly debt and receipts from the sale of non-core assets, in order to finance their operations. In addition to issuing bonds, companies benefited from the reserve base lending structure – a bank-syndicated revolving credit facility secured by the companies’ oil and gas reserves as collateral. This structure was used heavily by small and medium-sized companies with non-investment credit rating that did not have as easy access to the corporate bond market.
2015‑16: The survival phase
The collapse of prices in the second half of 2014 and throughout 2015 and early 2016 had a major impact on the way the shale industry operates. Companies switched to survival mode, focusing on improving efficiency and cutting costs. The number of firms declaring bankruptcy and filling for Chapter 11 protection, a form of bankruptcy involving reorganisation, skyrocketed to almost 100 in 2015-16.
The fall in prices also changed the way the shale industry was financed. Debt finance dried up as banks were unwilling to lend during a period of market turmoil, with bond yield spreads widening to over 1 000 basis points and the credit rating of the majority of companies being downgraded. Asset sales also dropped by 70% in 2015 as owners were unwilling to part with assets at the much lower prices on offer. While the main buyers of the assets were US independent companies, the market turmoil discouraged bank lending, opening up opportunities for financial firms such as private equity firms, which typically have a higher risk profile. Those firms accounted for around 30% of reported asset deals over 2015-16. Available funding from the reserve base lending structure also declined as the value of proved reserves for collateral shrank with lower oil prices. The net result was that companies were obliged to raise equity to finance their operations – a more expensive option.
Despite the slump in revenues throughout this period, the shale industry actually saw an improvement in free cash flow as a result of huge cuts in capital spending and costs. Between 2014 and 2016, investment fell by 70% and costs by around half. Cost reductions helped to offset the impact of less investment, such that shale oil production declined only modestly in 2016.
2017: The consolidation phase
The recovery of oil prices since mid-2016 following the collective decision by the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers to cut output led to a revival in confidence in the US shale sector. Further advances in technology, huge efficiency gains and cost reductions, and an upward revision of the shale resource base triggered an increase of 60% in investment in 2017. In the meantime, the shale industry proved that its upstream cost structure had been rebased as it was able to offset inflationary pressures coming from overheating of the supply chain, further reducing the overall costs per barrel produced.
Despite the improvements achieved, however, the shale sector continued to slightly over-spend the cash flow generated from its operations, with 2017 cumulative free cash flow remaining overall negative. Asset sales once again became the main source of financing operations, with most transactions occurring between US independent companies. Asset sales involved mainly acreage rather than whole companies, as companies sought to do relatively small deals as a way of making gains in operational efficiency. The confidence in the shale sector, traditionally dominated by private investors and small and medium-sized companies, received a boost from announcements by large US oil companies of their intention to make substantial investments.
2018: Profitability at last?
Current trends suggest that the shale industry as a whole may finally turn a profit in 2018, although downside risks remain. Thanks to a 60% increase in investment in 2017 and, based on company plans, an estimated 20% increase in 2018, production is projected to grow by a record 1.3 mb/d to over 5.7 mb/d this year. Several companies expect positive free cash flow based on an assumed oil price well below the levels seen so far in 2018 and there are clear indications that bond markets and banks are taking a more positive attitude to the sector, following encouraging financial results for the first quarter. On this basis, this we estimate that the shale sector as a whole is on track to achieve, for the first time in its history, positive free cash flow in 2018. This result is all the more impressive given the context of rising investment.
Structural changes also augur well for the sector. Recent consolidation, such as the recent USD 9.5 billion Concho-RSP Permian merger, and the increased participation of the majors and other international companies could bring significant economies of scale and accelerate technology developments, including through digitalization. Larger companies generally have a more robust financial structure and rely less on external sources of financing, so their shale investment will be less vulnerable to future downswings in oil prices and financial conditions.
The potential risks for shale independent from rising interest rates are currently attracting a lot of attention. The impact of rising interest rates on independent oil and gas companies in the US shale industry may also be small. Most companies are highly leveraged, benefiting from the ample availability of low-cost bond finance. However, given the high depletion rate, the time horizon of shale projects is so low that the discount rate has only a minor impact on the net present value of a given project. Rising interest rates often coincide with tighter lending conditions, which may make it harder for companies to service their debts and refinance their operations. But this risk can be managed through asset sales to less-capital-constrained companies, such as the majors, and increased reliance on equity raising through IPOs and private equity.
A lot of attention has been focused on interest expenses – the cost of repaying debt. The development of shale production has been accompanied by constantly rising interest expenses, which has impeded companies from generating profits sustainably. For the first time, the overall amount of interest expenses paid by shale companies declined in 2017. While US shale companies remain far more leveraged (measured by the net debt/equity ratio) than traditional operators, leverage is falling from its peak in 2015 and the average interest rate paid by shale companies – currently around 6% – has been broadly stable in recent years despite rising interest rates generally since the end of 2015, though they still pay more than conventional oil producers. Improving financial conditions mean that shale companies are able to borrow more cheaply than before.
The US shale industry seems to have reached a turning point with the recent significant improvement in its financial sustainability. But major uncertainties and important downside risks to the future of the shale industry remain:
Above-ground constraints: With production rising very rapidly in certain basins, such as the Permian, timely investment in takeaway capacity and pipeline infrastructure will be vital to the further expansion of the industry. At present, several producers in the Permian Basin are forced to discount their crude oil by more than USD 15 per barrel compared with the price on the Gulf Coast due to a lack of pipeline capacity. No significant pipeline capacity expansion is expected before 2019. The importance of infrastructure applies not only to oil but also to associated gas production, wastewater and other products. In the absence of new pipeline capacity, companies might be forced to curb drilling or ship their production using trucks or rail, which are usually much more expensive.
Further productivity gains: The continued ability of the companies to offset inflationary pressures with improved productivity stemming from technology or improved project execution remains very uncertain. In most active basins, especially the Permian, there are clear signs of overheating and bottlenecks in skilled labour, materials and equipment. In addition to the potential for further technological advances, there may be scope for more efficiency gains, for instance by expanding operations in continuous acreages, improved understanding of the resource base and more accurate spacing of wells.
Grabbing the fruits of the “digital revolution”: Companies are putting more effort into developing and adopting innovative digital technologies and big-data analytics in order to reduce costs, by optimising operations, improving reservoir modelling and enhancing processes.
Competition from other sources of oil: The US shale sector has not been alone in reducing its costs and will need to continue to do so to remain competitive in international markets. Most onshore resources, especially in OPEC countries, cost less to produce than shale oil, while the bulk of new deepwater projects are competitive with the cheapest shale basins. Consequently, the US shale industry is required to keep improving.
This analysis was written by IEA Senior Programme Officer Alessandro Blasi and IEA Energy Investment Analyst Yoko Nobuoka, and was adapted from World Energy Investment 2018. Source: IEA
Energy Production is Moving Upwards
The United Nations (UN) Environment Programme, and numerous research organizations working in consortium found in a recent report “the world’s nations are on track to produce more than twice as much coal, oil, and gas as can be burned in 2030.”The British Petroleum (BP) Statistical Review of World Energy 2019 has:
“Total global proved reserves of oil – that is the volumes that can be recovered from known reservoirs under existing economic and operating condition – stood at 1.730 trillion barrels at the end of 2018.”
The world has plenty of oil, and we are not close to reaching peak oil, and consumption is growing according to the International Energy Agency’s latest projections. This on top of U.S., CO2 emissions rose in 2018, 2.7 percent for the first time since 2014 according to the Energy Information Administration (EIA) – the uptick came from “higher natural gas-related emissions, but coal emissions fell by 4 percent.”
Economic growth coupled with hotter summers, and colder winters contributed to U.S. emission increases. Increased renewable usage from sun and wind farms also aided emission growth since solar panels and wind turbines are intermittent energy to electricity sources that need continual fossil fuel backup from coal and natural gas-powered, power plants.
Fossil fuel production will outpace Paris Climate Agreement (PCA) reductions that target to keep temperature increases under 1.5degrees Celsius, or at 2 degree Celsius, pre-Industrial levels. Growing prosperity in China, India, Africa, and the U.S. will fuel production gains, and override PCA agreement accords.
This analysis is based on energy policy from eight of the largest fossil fuel, and deep earth mineral producers in the world: “Australia, Canada, Russia, U.S., China, India, Indonesia, and Norway.” These eight countries constitute 60 percent of domestic-based, and global fossil fuel production. Middle Eastern countries such as Saudi Arabia and Iran do not release production numbers.
PCA signatories are upset over increased global fossil fuel exploration and production (E&P). China, India and the booming Asian hemisphere (what is now called the “Asian Century”) are using more oil, coal, and natural gas today and into the projected future. Whereas, new clean energy investments “fell by more than a fifth, coal-fired power generation jumped to a new high last year.” This means renewables such as solar, wind, and biomass used for energy to electricity are not overtaking fossil fuels anytime soon.
Evidenced by coal-fired power generation excavated and used increased the past two years, and “coal accounted for 47% of all power generation across 104 countries.” India’s over one billion people and growing population has confirmed coal is their energy to electrical mainstay for the next thirty years.
The only carbon-free, zero-carbon energy to electricity source is nuclear energy. It is France’s number one energy to electricity generation resource. Not even natural gas-fired power plants meet this criterion. If fossil fuels are growing then nuclear energy to combat rising emissions is the best electrical option available under current, emission-restraining, technological constraints.
International Energy Agency (IEA) chief, Fatih Birol expects the U.S. shale sector to continue explosive growth. Birol also said, “that the U.S. will make up most of global oil supply growth.” This will fill the gap for Asian countries needing additional oil and natural gas. Additionally, this boom in U.S. shale E&P that began during the Obama administration continues upending and changing global, geopolitics in unexpected ways that doesn’t involve traditional militaries or large-scale global conflicts. This is positive for global economic prosperity.
The world is awash in oil, natural gas, and coal whether we like it or not according to the BP Statistical Review of World Energy, 2019, but global policymakers are causing more problems than solutions by embracing renewables and banning fossil fuel E&P. Europe’s Green New Deal is based on unrealized scientific evidence that causes environmental leaders like Michael Shellenberger to dispute the hyperbolic climate rhetoric.
Embracing global warming energy policies produce results that damages the environment from “millions of toxic wind turbine blades sent to landfills,” to electrical grid blackouts in Australia, Great Britain and New York City (and a $6 billion ratepayer, wind subsidy, cost overcharge) to a Texas city needlessly enduring surging electricity costs from going 100 percent renewable. We are now witnessing wind power disasters in Canada, Europe (especially, Germany), Ireland, and the environmental cleanup costs are higher than fossil fuels compared to the taxpayer and ratepayer subsidies renewables receive.
Leading U.S. Democratic Presidential candidates want to eliminate fossil fuels by replacing them with renewables according to environmentalist Paul Driessen without understanding the consequences of how fossil fuels affect every part of all of our lives.
Hydraulic fracturing (fracking) is “under fire in California,” (the 5thlargest economy in the world) without explaining how does this economically robust state replace the over 6,000 products that originate from a barrel of crude oil? These anti-fossil fuel decisions cause companies like international, financial giant Charles Schwab to leave the state, and hurt American economic interests and national security. This ultimately affects NATO, EU, and America’s geopolitical, global security interests that are the cornerstone of the post World War II, U.S.-led, liberal order.
America is attempting to electrify their economy and decarbonize without understanding electricity is not a stand-alone energy source the way fossil fuels, nuclear, and renewables are – but common renewables, the sun and wind for energy to electricity – run into problems over being chaotically intermittent, and mathematically unstable. Again, the only way to “reduce greenhouse gas emissions,” and produce zero-carbon energy to electricity is from nuclear power plants.
From Berkeley, California to Brookline, Massachusetts that recently voted to ban natural gas, and only use electricity for heat, air conditioning, and appliance-use this is a vote to economically depress these cities. Massachusetts’ electrification needs are approximately 50 percent met by natural gas, and the state has a shortfall over banning new pipelines. To meet their natural gas needs, Massachusetts’s imports12 percent of their natural gas from Russia.
What we are seeing is a fossil fuel dilemma, and climate change, anthropogenic (man-made) global warming, and energy policies based on these premises to rid the world of carbon and greenhouse-gases are “a first-world problem.” The U.S., European capitals, and the United Nations (UN) seemed more concerned about the environment than the 2 billion people globally without electricity.
Shockingly, the U.S. could literally turn off the entire country from any source of energy and global emissions would still grow according to U.S. Congressional testimony in 2017. The entire U.S. economy, military and government could disappear, and global pollution, and respiratory illness would still rise. The reason why is “one of the biggest sources of carbon dioxide emissions is developing countries.” Think China, India, and Africa.
What if it’s time to start asking serious questions about the validity of man-made climate change, and how “scientific breakthrough” such as carbon capture technology coming from the Massachusetts Institute of Technology (M.I.T.) can save us instead of renewables and warning the earth will die off in 10-12 years? It’s difficult to trust these warnings when every apocalyptic prediction from the last 50 years has never come true that the earth is dying, because of global warming.
When teen climate activist, Greta Thunberg, made her impassioned speech to the UN this fall, another group of 500 atmospheric scientists, engineers and related professional called Friends of Science sent a registered letter to the UN Secretary-General “stating that there is no climate emergency and climate policies should be designed to benefit the lives of people.”
If fossil fuels are growing, but the west, led by the U.S. and Europe believe CO2 is killing the planet then this dilemma of fossil fuels versus renewables powering the planet worsens. The frightening scenario of environmental sustainability doesn’t seem to coincide with economic growth laid out in the book The Green Reich. This end-game of ridding the world of 6,000 products, affordable electricity, economic growth for Third World countries – even entire continents – is on the line without any answers for how you replace fossil fuels with solar panels, wind turbines, and electric vehicles.
Ideology says renewables will work, damn the consequences, the facts say otherwise. Abundant, affordable, reliable, scalable, flexible oil, coal, natural gas and nuclear energy are why the planet is alive. Rid the world of this, and jobs disappear, economies wither, and modern, prosperous, peace-loving, sustainable nations collapse into anarchy. Upend the growth of fossil fuels globally, and watch China, India, Russia, Africa and other growing nations undo the liberal-led order. Do this and lifestyles and “living standards spiral downward” for the remainder of this century.
The power of Siberia heralds a landmark of Sino-Russian solidarity
Authors: Zhou Dongchen, Paul Wang
Although China and Russia have forged their comprehensive strategic partnership into a de facto alliance, it is still opined in the way of the classical geopolitics. Yet, the east-route of China-Russia natural gas pipeline which was functional on December 2 has since heralded a new milestone for deepened energy cooperation between these two Eurasian powers. The project that was signed in 2014 is a $400-billion-gas supply deal and connects the world’s largest natural gas supplier (with a total length of more than 5,000 km) and the most potential natural gas consumer market. It is the first natural gas pipeline between the two largest land powers and also the first cross-border gas pipeline in northeast China. Technically, it is scheduled to be completed in 2020.
China and Russia lost no time to show a video call on December 2 as the two heads of state, Xi and Putin, jointly witnessed the launching ceremony of the China-Russia east-route natural gas pipeline. Xi, in Beijing, hailed the pipeline as a historical deal of Sino-Russian energy cooperation, describing it as a win-win model of major powers’ cooperation. He requested to ensure the project’s safety and reliability and to promote sustainable economic and social development in areas along the pipeline.
For sure, the east-route pipeline is not only supplied to China, but also to the local consumers in Russia’s Far East. In addition, the project would insure to create jobs and bring in more income for the local Russians, further promoting the economic and social development in Russia. Due to this, Putin announced in Russia’s Sochi that inauguration of the pipeline is of historic significance and would bring bilateral strategic relations to new heights. The event itself can be perceived both historical and unprecedented because a gas route has been laid underneath the Eurasian gas space and now moving towards one of the largest geoeconomic formation. With this large-scale gas project started, a new page will open in bilateral relations not only in the energy field, but also there is enormous potential for further development and further cooperation.
Considering that China and Russia have cooperated in the fields of natural and oil projects for decades, why is the east-route gas so significant to the two sides? Firstly, trans-regional gas projects, also named as “the power of Siberia”, contribute to the development of many regions inside and outside the two countries, which subsequently invest additional infrastructure and jobs. As the Chinese market is constantly growing, and in recent years has been growing at double-digit rates, Beijing’s energy needs will continue to grow steadily. Secondly, while coal remains the main source of energy for Chinese economic leap, a further industrialization has led to increasing environmental backlash. Be aware of the plights of its dependence on coal, China has been driven by the urgent needs over the past years to have accelerated the use of clean and newer environmental standards backed up by its significant efforts to combat air pollution.
Accordingly, it is not surprising that China is keen in reducing greenhouse gas emissions, striving to reduce the use of coal and strictly implementing the Paris Accords, including China’s large investments in its research and development of large-scale energy efficiency programs, and the rapid expansion of the renewable energy and nuclear energy. Therefore, the Power of Siberia gas pipeline will not only contribute to the socio-economic development of the Far East, but will also create conditions for gas supply and gasification of the Russian regions alongside the development of modern gas processing and gas-chemical industries in Russia. Taking into account a new map of the global energy being formed, it is fair to argue that “the Power of Siberia” would create a new pipeline system in the existing transport corridor of the Siberia to the borders of the two countries and beyond in the near future.
For sure, it is necessary to note the great merit of two leaders-Chinese President Xi and his Russian counterpart Putin-under the strategic leadership of which Sino-Russian relations of comprehensive coordination and strategic partnership have entered a new era. This is characterized by the highest degree of mutual trust, the highest level of interaction and strategic consensus. In light of the current international reality where the United States has always used the difference in political systems and diplomatic philosophies to attack China Russia with a cold war mentality, the further strengthening of the strategic interaction between the two Eurasian powers is of special meaning and the impacts on the world peace and security. In the coming decades, China will have become more dependent on the energy supply and agricultural goods from its northern neighbor, while the Russian economy in the vast Siberia will be benefited by substantial FDI from China. As a result, the current discrepancy between their strong political relations and the weak economic ties would be effectively addressed, together, the pipeline could revive the prosperity of China’s north eastern provinces and Russia’s Far East region, not mention of their current close cooperation in the field of information technology and space.
Accordingly, it is fair to argue that China and Russia play a decisive role in the formation of a new energy map of the world with the launch of the “Power of Siberia” gas pipeline project which sets a prime example of how the natural gas market is becoming mobile and cross-regional. Equally in terms of the public disagreements between the United States and its European allies, China and Russia working together have moved towards more dynamic relations with European countries and in particular the member states of the European Economic Union—Russia, Belarus, Kazakhstan, Tajikistan and Armenia.
All in all, China and Russia’s foreign policy, based on the pursuit of mutual benefits, made the materialization of the power of Siberia energy deal feasible. The operationalization of the pipeline is proof that the world doesn’t just function based on a single system. Americans may believe that theirs functions well, but that doesn’t disqualify other systems from being equally functional or even superior in making and executing long-term goals that benefit the public. The pipeline has elevated the bilateral relationship to a new level and will benefit future generations. With this new linkage, Sino-Russian common interests would be more intertwined, making mutual benefits even more important going forward. This is what President Xi has reiterated as our true relationship will be of utmost importance in China’s foreign policy.
Clash of titans: Is OPEC+ deal nearing its end?
Only a few days is left before the unveiling of a big decision which will mostly determine the future of oil market in the upcoming year.
Organization of the Petroleum Exporting Countries and its allies including Russia (known as OPEC+) are going to gather in Vienna during December 5-6 for the 177th Meeting of the OPEC Conference and the 7th OPEC and non-OPEC Ministerial Meeting, to discuss the oil market and reach a decision regarding the next step for the OPEC+ cuts deal.
Many experts and analysts expect OPEC+ to decide on extending the current pact rather than deepening the cuts, however contrasting signals from the groups’ two major policy-makers indicate that the situation doesn’t seem to be unwinding toward such a decision.
Saudi Arabia and Aramco IPO
After two years of postponing and speculation, Saudi Arabia has finally announced that the kingdom is going to officially offer 1.5 percent of its oil-giant’s stakes on December 5, allowing institutional investors to submit their initial offers. Interestingly, Aramco’s initial public offering (IPO) is concurrent with the 177th gathering of OPEC.
For years, the Saudis have been announcing that they will sell about five percent of Aramco’s stock in foreign and domestic stock exchanges; and since they valued the company at $2 trillion, it was estimated that Saudi Arabia would make $100 billion on its initial offering, and will use the proceeds to build on the foundations of the crown prince’s 2030 vision for an oil-free economy.
However, in spite of the many years of advertising and effort, Aramco’s IPO didn’t receive the attention and praise that the kingdom expected. Therefore, they reduced the IPO to 1.5 percent and it seems that they have even abandoned their dreams of attracting large-cap funds from foreign exchanges, at least for the time being.
So, Aramco’s initial offering is going to be only in their domestic stock exchange, and the IPO is likely to only generate over $25 billion in revenue for Saudi Arabia.
So far, Kuwait and the United Arab Emirates are the only foreign countries that are ready to participate in Aramco’s IPO, and there are no major investors from Europe or the United States.
With all that said, and considering the fact that after holding the IPO Saudis would not need high oil prices in the short-run, it seems that the kingdom is no longer eager for shouldering other OPEC+ members’ delinquencies regarding the oil production cuts.
Preparing for the IPO in the past year, Saudi Arabia turned a blind eye to the OPEC+ group members’ violations from the agreed production levels by major producers like Russia and Iraq and shouldered the burden by cutting its own output more than agreed to offset the over-production.
However, new signals are emerging which indicate that the kingdom is no longer willing to undermine its production for the sake of higher oil prices.
Last week, Bloomberg reported that Prince Abdulaziz bin Salman, Saudi’s new oil minister who replaced Khalid Al-Falih in September, is not going to follow his predecessor’s footsteps and is expected to voice the kingdom’s intolerance regarding the violation of the cuts deal.
Russia and the OPEC+
It has been more or less three years since Russia and some other oil producers joined hands with the 14-member OPEC to balance the oversupplied oil market and prevent the oil prices from further fall which was costing their economies a great deal.
Russia, as one of the world’s top oil producers and exporters, has been consistently voicing its support for a deal reached between OPEC and non-OPEC allies for volunteer production cuts to support the oil prices, however statistics show that the country itself hasn’t been doing much in this regard.
According to Bloomberg, Russia’s shipping data for 2019 indicates that the second pillar of the OPEC+ deal has conformed to the agreed production levels only for three months, namely May, June and July and even the production cuts in those three months doesn’t seem to be voluntarily since it was during the disruption of the key Druzhba oil pipeline.
Other signatories of the deal haven’t been much helpful in this regard, Iraq, for example, was supposed to pump about 4.51 million barrels per day (bpd), but has produced on average about 4.8 million bpd. Kazakhstan accepted a 1.86-million-bpd limit, however it has produced close to 1.95 million barrels of oil and finally Nigeria agreed to a quota of 1.68 million bpd, but has regularly pumped more than 1.8 million.
These constant violations have clearly pushed the Saudis to their limit, and now with the Aramco IPO going to be no longer a motive for Saudi to offset the excess production by OPEC+ members, Russia seems to be rethinking the worth of remaining in the OPEC+ pact.
Russian officials have been recently showing some vague signals, indicating a possible abandoning of the OPEC+ deal.
Tass news agency recently quoted Russia’s oil minister as saying that his country favors postponing any decision-making regarding the new supply caps until April, which is the pact’s due.
The discrepancy between the views of OPEC+ titans has prompted some experts to speculate on the possibility of a breakup of the cuts deal; a speculation which seriously affected the oil market in the end of this month trades.
On Friday, which was the last day of November trades, U.S. crude oil fell by nearly $3, or 5 percent, to about $55 a barrel. Brent crude also experienced a $2.8 or 4.4 percent drop and returned to the $50 range.
Considering the oil markets current status, it seems that we are going to witness a very tense OPEC+ gathering in Vienna this week. One can only wait to see how the situation is going to unwind.
However, the most expected outcome would be that Russia and Saudi Arabia will agree to extend the pact for another few months to buy time in order to assess the market’s situation in the New Year and then decide how to proceed.
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