FX.co ★ OPEC tightens grip as independent shale drillers fade away

Independent shale drilling companies, once the resilient challengers to OPEC's long-standing monopoly on the global stage, are now at risk of disappearing, Bloomberg reports. There is a high likelihood that international behemoths will soon swallow them up. Within the next five years, smaller shale explorers will find themselves absorbed by their larger rivals, experts predict. The reasons behind this are mounting financial pressures and a surge in demand for drilling targets. A good example of this tendency is the deal between Pioneer Natural Resources Co. and oil titan Exxon Mobil Corp., which acquired the first one for $60 billion. “Shale companies cannot survive on their own long term. They’re going to have to merge up, consolidate, and be part of diversified companies,” CEO of the Pioneer Natural Resources Co. said. The consolidation of small independent drillers will eliminate competition for power players like Saudi Arabia and its OPEC allies. Back in 2020, the world witnessed a historic collapse in energy demand and a consequent glut of crude oil. It forced regulatory bodies in the US to contemplate drilling restrictions to make smaller drillers curb their output. This would have created a much-needed cushion to tumbling oil prices. Therefore, a sharp reduction in the number of drilling firms in places like the Permian Basin promises to instill some stability in the oil market.