OPEC is likely to cut oil production again, CEO of US shale giant Pioneer Natural Resources said at a recent conference.
“Saudi [Arabia] is not going to let Brent stay around $75 a barrel,” Scott Sheffield said, adding that it wouldn’t surprise him “if they had another cut.”
Sheffield believes that oil futures will stay in backwardation going forward, because “there is no liquidity in the market”. No one is hedging, Sheffield said, so there’s nothing to bring up the forward prices.
As for oil prices, Sheffield sees the $80 a barrel mark as the base, with an upside of $150.
US-Saudi relations have improved in recent weeks following the decline in US gasoline prices and better-than-expected midterm election results for Democrats following a spat in October when the White House blamed Saudi Arabia for buffing its repeated requests to delay the crude oil production cut.
President Biden had then vowed to work with Congress to impose unspecified “consequences” on Saudi Arabia.
Now, Biden administration officials say there are no plans to follow through on that threat. Instead, officials from both countries say they pressing ahead with new military and intelligence projects and sensitive efforts to contain Iran amid stalled efforts to revive the international nuclear deal with Tehran.
