Americas News
Texas Congressman Says US Will Boost Shale Oil Production if OPEC, Other Nations Cut Theirs
Joe Barton, Republican congressman for Texas, last week responded to the possibility of the Organization of the Petroleum Exporting Countries (OPEC) slashing production to rebalance the global oil market by declaring that U.S. producers will correspondingly boost production and grow their market share.
Barton, who spearheaded the campaign to end the nation's exporting ban, told CNN Money, "What we've done by repealing the exporting ban is put the U.S. producer in the driver's seat; quite frankly, OPEC and Russia literally don't know what to do.
"So we've killed OPEC; it's gone."
Barton was presumably buoyed by the fact that despite OPEC's effort to sideline American shale producers by boosting its own low-cost output, U.S. production produced 9.3 million barrels per day (bpd) in November, down only 4 percent from a record high reached in April and ahead of production levels for the same time last year.
Barton predicts that thanks to U.S. producers now being allowed to ship overseas, production could escalate to as much as 20 million bpd in coming years. "Not only will the U.S. industry survive, it will flourish.
"The Saudi's can't increase production like that; the Russians can't, the Chinese can't; only the U.S. can."
The congressman further remarked that "It used to be the 11 or 12 oil ministers could have a conference call and set the market; they can't do that now."
Atif Kubursi, professor emeritus of economics at Canada's McMaster University and a former OPEC advisor, agrees with Barton – but only up to a point: "OPEC is no longer in its heyday, but it is absolutely still important," he told CBC News, adding that "They have survived lots of conflicts and wars and proven their resistance."
However, Kubursi does not believe that last week's announcement of Saudi Arabia, Russia, Venezuela, and Qatar possibly freezing output at January levels will have much impact on the global market, explaining that the slump in oil prices is "not just overproducing: the world economy is contracting, and with it the demand of oil."
The comments suggest there will be additional obstacles on the road to rising oil prices, which will presumably be welcome news for bunker buyers, who in recent months have witnessed bunker prices in some major ports fall to their lowest in over a decade on the back of the crashing crude prices resulting from the current oil market share war.
Ship & Bunker data shows that while prices have been volatile, with Singapore IFO380 over the last month having a spread of $30 per metric tonne, or around 19 percent, it has only gained $5.50 pmt in that time.
Meanwhile, analysts point to Saudi's declaration on Thursday that it would not cut oil output as proof of its pact with Russia and other nations will do nothing to correct a global market in crisis.
