According to the Energy Minister of the UAE, the OPEC is ready to start asking American shale oil producers to stop boosting their shale oil production. The statement was made during the International Petroleum Week (IP Week).
In particular, the Minister told the audience that the Secretary general of the OPEC was going to visit the United States in order to have talks with the major U.S. shale oil companies within the scope of CERAWeek, the oil-and-gas conference in Houston scheduled for March 5th – 9th. The Secretary seems to be planning to talk the shale companies into thanking twice before boosting their oil production even more. That’s necessary to avoid repeating the mistakes of the past when excessive oil production make the global market crash after creating oversupply. Back then, oil prices crashed by more than 70% in several months, which led to a big slowdown in oil production and the loss of a huge amount of jobs.
We remind you that 12 months ago, the Secretary General of the OPEC already tried to talk the Americans into avoiding any production hikes in order to eliminate the global oversupply of crude oil and make the prices rise. ButheAmericanplayersignoredthecall. By the way, back then, the OPEC+ deal was already supporting oil prices.
It seems like this time won’t be any different, but the OPEC will at least try to get precise production stats from the American shale oil producers. Obviously, the cartel is concerned about the fact that while they have been trying to freeze their oil production to cap and reduce the oversupply, the USA has turned into a major player (maybe even the biggest one) deciding the fate of the global oil market.
So, the OPEC+ deal signed by the OPEC and some non-OPEC nations led by Russia did manage to get rid of a certain part of the oversupply but failed to eliminate it. As a result, the deal was extended till the end of 2018. However, their plans were ruined by the American shale oil companies trying to win the lion’s share of the market.
