According to Dr Nakhle, OPEC+ has been instrumental in setting a floor to oil prices and helping them to recover from their bottom lows seen earlier this year. This however has not come easy and the organisation is facing many challenges whether the uncertain demand outlook, additional supplies returning to the market or maintaining the discipline among its members.
In the meantime, the US shale has behaved exactly as expected: following oil prices. When prices collapsed, production collapsed as well. As prices stabilised, production stabilised in tandem, while with a sustainably price rise, an increase in output should not be ruled out.
While the scale of bankruptcies in the shale industry is massive, this isn’t necessarily all bad. The US has an efficient system of dealing with bankruptcies – allowing companies with healthy finances to take over the assets of the ones in distress. The outcome might well be a healthier industry.