Big Oil Chiefs Tell OPEC They're Adapting To Price Shock

Big Oil Chiefs Tell OPEC They're Adapting To Price Shock
Six months after OPEC upended oil markets and sent prices crashing, the head of US oil giant ExxonMobil has an unusual message for the cartel: thanks.


VIENNA, June 3 (Reuters) - Six months after OPEC upended oil markets and sent prices crashing, the head of U.S. oil giant ExxonMobil has an unusual message for the cartel: thanks.

While Exxon and other large oil companies have been forced to slash spending, cut staff and sacrifice tens of billions of dollars in revenue as oil prices halved, they have also watched with quiet satisfaction as upstart rivals from the U.S. shale patch struggle simply to survive through the downturn.

The price collapse has helped shine a sharper light on the highest-cost producers, Rex Tillerson, head of the world's largest publicly traded oil company, told a rare meeting of oil executives and OPEC ministers.

"We're trying to discover where the marginal barrels are around the world. It's important for all of us to know," he said. "We are constantly chasing the price against the cost of supply."

"We live with a lot of uncertainty and we're rewarded for how well we manage it," said Tillerson, one of the best-paid CEOs in the world. If you can't live with uncertainty, "be a librarian", he said.

OPEC decided against cutting its oil production last year to fight for market share with non-OPEC producers, thus aggravating a global oil glut that arose due to a shale boom in the United States. The group is expected to maintain that policy on Friday at its first meeting since the November decision.

Oil prices crashed to as low as $46 per barrel by early 2015 from as much as $115 in mid-2014.


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Stu | Jun. 8, 2015
John, take your pointless ranting somewhere else please. These articles are for people who want to stay current on O&G news.

John Smith | Jun. 5, 2015
OPEC have no understanding at all how the US works. And weve seen how well some of their other (social) models work - right? Sure - the shale is tough to produce - and sure theyll push many out of the business - but this is the free world were talking - not the OPEC model! As soon as the oil price rises the independent shale teams will sniff a profit and be back at it - producing more than ever. Itll be cyclic - but cyclic is what the US does well. And I wouldnt want to be a Saudi working the calculator to see how much they have in the bank vs. what they could have had. The rest of has to be hurting and itll all be for nothing. Basically - if the US domestic, rather than Russia was the target then the US has already won the game - OPEC wont be able to raise the price above a threshold or hold the US to ransom ever again - theyll know the US can open the tap anytime. This allows the US to set the forward agenda - OPEC will only be able to realize short term gain - theyll make money only until the US production ramps up again.

John | Jun. 3, 2015
The oil companies have been bending the consumers over for years and getting away with it while their executives reap outrageous pay and benefits. They hide behind claims of transition from one blend to another, they always manage to manipulate the price so as to take advantage of peak holiday driving even long before the holiday approaches. They fail to monitor conditions of their equipment and procedures resulting in environmental disasters and in some cases personal death. They ship our oil production to foreign countries while holding the U S consumer hostage all for the purpose of filling the greedy executives pockets.

d jones | Jun. 3, 2015
I think OPEC will take the pressure up a notch and drop another shoe. They have not seen the level of capitulation they want to see.

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