Vitol Sees Shale Pressuring Prices in 2018, but Russia and Saudis Claim to Welcome More U.S. Production

While Moscow this week was the scene of renewed relations between Russia and Saudi Arabia as well as statements that their efforts to curb the global glut have been beneficial to crude markets, Vitol, the world's largest oil trader, on Thursday reiterated a familiar and contradictory message: that oil demand will peak and the industry will shrink in coming years.

Ian Taylor, CEO for Vitol, believes demand will peak around 2028-2030 and remarked, "The industry is in for a period of shrinkage; what keeps me up at night, is thinking - where is our place in it?

"We're looking at a big renewable investment, but it doesn't trade."

I*n the shorter terms, Taylor predicted that rising U.S. exports will put pressure on crude prices in 2018; but he conceded that they could recover towards $60-$65 per barrel over the next two to three years.

But if U.S. shale is the culprit in Taylor's short-term scenario, both Russia and Saudi Arabia seemed  eager to downplay their concern: Alexander Novak, energy minister for Russia, told CNBC that the fact his country has reduced its crude production is proof that the former Soviet Union isn't trying to quash U.S. shale: he said the output reduction has raised prices and helped shale production develop.

For his part, Khalid al-Falih, energy minister for the Saudis, said about the Americans on Thursday,  "Shale coming in and happening again in 2018 doesn't bother me at all: the market can absorb it."

Al-Falih even went so far as to tell CNBC, "We welcome the contributions of shale as demand approaches 100 million barrels per day next year and continues rising.

"In the years and decades to come, we want shale to continue to be a major contributor, but we believe the pace of its growth will be more important."

It's been a long week of Organization of the Petroleum Exporting Countries (OPEC) members and their allies delivering relentlessly upbeat messages about their own performance and the future health of the crude market: on Wednesday its secretary-general, Mohammed Barkindo, declared that between his cartel and Russia, "we are in the process of writing a completely new chapter in the history of oil."