Dec 21, 2017

BP chief says shale will have limited effect on global oil market

There is a limit to how big a role US shale can play in the global oil market, according to the chief executive of BP, who said traditional producers such as Saudi Arabia would continue to exert more influence over crude prices. Surging production of US shale oil and gas, made possible by advances in drilling technology which has given access to hydrocarbons trapped in "Tight" rock formations, has weakened the stranglehold of Opec producer nations over the crude market. The Opec cartel, acting with Russia, has reasserted its influence over the market in the past year by agreeing production cuts that have pushed crude prices back above $60 a barrel after a deep three-year downturn caused by the shale boom. US "Supermajors" ExxonMobil and Chevron are among those investing heavily in US shale, even as independent producers such as Marathon Oil and Continental Resources face investor scrutiny over poor returns on capital. Competition from shale has deterred investment in conventional resources in recent years, leading some in the industry to predict an oil supply crunch.

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