Oil prices have undergone structural change say leadersNews // December 9, 2016
More than two-thirds of maritime leaders in Asia now believe the persistent volatility in oil prices represents a structural rather than cyclical change, according to new data released by Sea Asia 2017.
The results come as the maritime industry faces its toughest period yet – with oil prices falling by more than 70 per cent since mid-2014 – and with the recent supply agreement by OPEC to cut production. Conducted ahead of Sea Asia 2017, the survey was carried out among maritime leaders to identify trends to shape discussions at Sea Asia 2017 next April.
Jarand Rystad from Rystad Energy, a speaker at Sea Asia 2017, said the big debate right now is whether markets are in fact experiencing a structural change or a traditional cycle. “The continued growth of US shale fields and recent significant reduction in costs to develop this resource clearly represents a structural change. The counter view is that shale alone still cannot balance the decline in supply globally. Therefore, conventional production from onshore and offshore will still be an important part of global supply growth beyond 2020,” he said.
On the recent OPEC announcement to reduce production, Mr Rystad said: "The surprisingly firm agreement by OPEC surely puts the cartel back on stage, but the relatively modest response in oil prices could be short-lived. In the coming years, oil prices will firstly be regulated by market forces. Balancing is also happening slowly but firmly from thousands of producing oil fields around the world.”