Last week’s OPEC deal has the whole world talking, including Crescent CEO John Goff and JLL international director Bruce Rutherford. The two spoke with Bisnow about where they see the global supply and demand balance headed, and it's generally an optimistic outlook.

John says what’s happening right now goes beyond OPEC. The deal was certainly an important factor impacting price, but there’s a bigger story—and it has everything to do with the lack of investment in the industry in the last three to four years. Bruce says there haven't been enough new offshore or land-based wells to offset the natural depletion of wells. The lack of investment has planted the seeds of imbalance, which will benefit energy companies.

Outside of real estate, John's biggest investment by far is in oil and gas. He’s all about timing, and he thinks the timing of the oil and gas market is like none he’s ever seen. He’s very bullish on the market, especially Houston's future. Of course, it all comes down to the price. “I don’t know where the next $5 move is headed, but I do know where the next $20 is headed,” John told us. Predicting smaller market fluctuations has become increasingly difficult, but John is confident we’ll see $70/barrel before we see $30. 

It's not just about hitting a certain price, but about maintaining it. Bruce thinks there are two important price thresholds—$62 and $80. At a sustained $62, land-based drilling will begin to resume. But that’s just one phase of restoration. Offshore rigs are so expensive, the price needs to be $80 to move them out. The price differential compounds global supply issues, as a disproportionate amount of global supply comes from offshore wells.

Global demand has never decreased; it simply rises more or less rapidly. Tudor Pickering Holt forecasts an increase in global demand ranging from 1 million to 1.5 million barrels per day per year. The number largely depends on how fast Asian and European economies recover, increasing demand.

Don’t hold your breath though—it will be a while before Houston feels any impact. Since the oil downturn, several years of leasing activity have been erased, Bruce says. He thinks it will take three or four years before we see areas like the Energy Corridor, Westchase and Downtown return to normal.

Lack of investment leading to further supply and demand conflict is just one part of the picture. To get the full portrait, join us at our first-ever National Impact Of Oil & Gas on CRE event, where both John and Bruce will be sharing even more expertise among an all-star lineup. Reserve your spot today.