Cowboy_DuelThe big beasts of the global oil industry will gather today at one of the most important events in their calendar – the IHS CERAWeek conference in Houston, which is often dubbed the Davos of the energy industry.

Although the strapline for the conference is “Energy Transition: Strategies for a New World” – the industry will be totally preoccupied with the low price rather than clean technology.

“Once again we gather at a time of turbulence and uncertainty for the global energy community”, is the message from IHS CERA chair, Daniel Yergin.

The conference is a coming together of opposite players in the oil price debate: a Mexican stand-off reminiscent of the old westerns. On the one side is the highly influential and powerful Saudi Oil Minister Ali Al-Naimi and on the other the struggling US Shale industry, already wounded by the low oil prices, but still alive.

It is the first time the two have met since the Saudis decided not to cut production. It was Al-Naima’s decision back in November 2014 that has led to the 70 per cent reduction in oil prices that have caused such total turmoil in the industry.

It has led to some 40 US shale companies declaring bankruptcy since the beginning of last year. A further seventy-odd face significant difficulties in sustaining debt, according to Moody’s Investors Service.

Tomorrow, Al-Naimi will deliver the keynote speech. His audience will be desperate to hear whether the Saudis will cut production to ease the pressure on the industry. Everyone in the industry will be following Al-Naimi’s speech word by word.

Alex Mills, president of the Texas Alliance of Energy Producers tells Reuters “The pain is at a threshold right now. People are now willing to sit down and talk about possible remedies to that pain”. Texas has lost 60,000 oil industry related jobs in the last eighteen months.

Mills adds: “I think it should be something of concern to our leaders in Texas and in Washington”, if the Saudis will continue to undermine the US shale industry.

Analysts are saying that at some stage the price of oil will bounce back, but no one seems to know when that will be. “There’s a short fix, and a long fix,” Andrew Lebow, a senior partner at Commodity Research Group tells Bloomberg.

Lebow asks “Are we going for the short fix of a production cut, or the long-haul slog of rebalancing the market? That’s what everyone at CERA is going to be talking about. And it’s all dependent on the Saudis.”

But it also now dependent on Iran too. Whilst the recent Saudi-Russian deal has not calmed the markets in a way some had hoped, there are also now new jitters around Iran. The country, which was previously OPEC’s No. 2 exporter, wants to increase production by 700,000 bpd in the near future.

Although the country faces teething problems ratcheting up production, according to Moody’s Investors Service: “Iran’s return to the global oil market will add supply to an oversaturated market”.

And simple supply and demand means that this can only push the price of oil lower and put further pressure on the Saudis to cut production.

But as everyone squabbles over the oil price, the industry forgets about talking about climate change and a transition to a clean energy future.

Deborah Gordon, director of the Carnegie Endowment for International Peace’s energy and climate program says: “You can’t have these conversations when oil is $125 because then you can’t get it out of the ground quickly enough. And you can’t have it at $27 because you’re just trying to survive.”