With OPEC announcing cuts in production, which will not be as large as they technically announced, you might expect this would impact the industry in North Dakota. The answer is a definite “maybe.” The dynamics of the industry are in flux as it matured from the frenzied startup phase. Let’s take a look at the output over the last 20 years.
The pandemic clearly caused a few issues in the industry with output yet to show any sustained recovery after the COVID created decline. We will talk labor force another day, but it is really a question mark about the sustained direction for the industry. Perhaps even more surprising is the lack of direction occurred while prices increased substantially.
COVID induced a disastrous drop in the price per barrel for ND oil. Even with the subsequent increase in the prices to near peak levels it did not induce a change in production levels. It is hard to believe the oil price announcement from OPEC will push prices to much higher, but even if it does, right now the industry is not inclined to increase production too much. Clearly this could change, but more than price is at work in these decisions right now.