That means extending production curbs beyond this year even as U.S. producers including Conoco plan to increase output, the CEO said in an interview with Bloomberg TV.
OPEC and other major producers agreed to limit their output in 2016. That helped rein in a global supply glut and revived prices. But it effectively ceded new revenues to upstart U.S. shale suppliers. During a media briefing in Houston on Monday, OPEC Secretary General Mohammad Barkindo said it was too early for OPEC to discuss extending the cuts into 2019.
“They have to remain disciplined; they have to keep trying to take the volatility out of the equation," Lance said from the CERAWeek by IHS Markit oil-industry conference in Houston. “That’s the role they can play."
Lance acknowledged the rapid growth of U.S. shale was “part of the problem" challenging the rally in the oil market. But American producers that gained from higher prices, and are protected by hedging contracts, will probably keep growing, with output likely to grow more than 1 MMbopd this year, he said.
“I do think that the U.S. is coming back very strongly and will consume most of the incremental demand in the market today," Lance said in the interview.
In other comments:Lance said President Donald Trump’s proposed tariffs on imported steel and aluminum will raise costs for oil and gas companies, mostly for more expensive pipelines. He said growing efficiencies in the industry could offset some of the impact. Large mergers and acquisitions in oil remain unlikely, given uncertainties surrounding commodities prices: “The conversations in the boardrooms between buyers and sellers are quite far apart when you have rising prices," he said. The ups and downs in crude markets are getting steeper and faster, increasing the challenges explorers face in managing risk and making drilling decisions, Lance told attendees at the conference: “Peak to peak and trough to trough, they’re getting closer together,” the CEO said during a Q&A with oil historian Daniel Yergin.