EMEA News
OPEC Raises Oil Demand Forecast but Now Wants U.S. Shale to Join the Output Cap
Once more, the Organization of the Petroleum Exporting Countries (OPEC) has contradicted statements made by its members, this time negating an earlier claim from Saudi Arabia that it welcomed more U.S. shale production: Mohammed Barkindo, secretary-general for OPEC, now says he wants the U.S. to participate in the cartel's crude cutback initiatives.
Speaking to delegates at the India Energy Forum organized by CERAWeek in New Delhi, Barkindo remarked, "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 learned from the current unique supply-driven cycle.
"At the moment ,we [OPEC and independent U.S. producers] both agreed that we have a shared responsibility in maintaining stability because they are also not insulated from the impact of this downturn."
He added that OPEC is seeking to conduct a meeting with American independent firms and hedge funds later this year or early next, because "both groups have become increasingly important in the energy markets," and "what we are trying to do is to reach out to these companies who also operate in these markets, who also feel the pinch of volatility from time to time and the downturn."
Most tellingly for a leader of a cartel that has traditionally been viewed as a rival to North American interests, Barkindo closed by commenting that "We cannot continue to live and operate in isolation: the world of energy is undergoing a massive structural transformation, energy transition is real."
Still, OPEC in its latest monthly report forecast higher demand for its oil in 2018 and once again reiterated that its cutback efforts are getting rid of the global glut; plus, it lowered its forecast for output growth from producers outside the cartel by 100,000 barrels per day (bpd) this year and 60,000 bpd in 2018.
The report also predicts that global demand for oil will grow by 1.5 million bpd this year and 1.4 million bpd in 2018, a raising of 30,000 bpd for each year.
But Barkindo's portrayal of his membership working tirelessly to reduce production and adhere to the spirit and intent of the cutbacks notwithstanding, the report's biggest revelation was OPEC's output for September: the 14 members pumped 32.75 million bpd last month, up about 88,500 barrels; Nigeria and Libya, both exempt from the cuts, led the gains with monthly increases of about 50,000 bpd each.
Last week, Khalid al-Falih, energy minister for the Saudis, said, "Shale coming in and happening again in 2018 doesn't bother me at all: the market can absorb it.....we welcome the contributions of shale as demand approach 100 million bpd."
