OPEC urges U.S. to cut shale production
OPEC General Secretary, Mohammed Barkindo, called on U.S. shale oil producers to help support plans to curb global oil supply on Tuesday, warning that unprecedented measures may be necessary next year in order to rebalance the oil market.
“We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” Barkindo said.
North American shale drillers have helped production soar by nearly 10 percent in the U.S. this year, according to Reuters, despite OPEC and some other producers — including Russia — cutting supplies in a bid to prop up prices.
Speaking at the India Energy Forum in New Delhi, Barkindo added that the U.S. and OPEC had agreed they must find a joint solution in order to ensure stability in the oil market.
The price of oil collapsed from near $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC’s reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil producing nations - in late 2016.
Meantime, the world’s largest oil producing nation and OPEC kingpin, Saudi Arabia, said Monday it had cut crude oil allocations for November by 560,000 barrels per day. The announcement appeared consistent with the kingdom’s commitment to abide by an OPEC-led supply reduction agreement.
On Sunday, Barkindo had suggested that OPEC, as well as other oil producers, may be forced to adopt “some extraordinary measures” in 2018 in order to rebalance the market.