U.S. shale companies have benefited from the supply-cut efforts from OPEC and its allies that boosted prices, OPEC Secretary General Mohammed Barkindo said during a Houston energy conference on Monday.
His comments came ahead of an OPEC meeting with U.S. oil producers for the third straight year at IHSMarkit’s CERAWeek conference, though this sit-down has attracted less attention than in past years.
Barkindo said that the rebalancing of the global oil market was a “work in progress,” and said supply adjustments will continue through 2019.
As OPEC has moved to restrain supply to keep prices buoyant, U.S. production has surged. The United States is now the world’s largest crude producer, with output of more than 12 million bpd, exceeding Saudi Arabia and Russia.
That has left OPEC in the odd position of reducing their market share and boosting U.S. global share. OPEC has reached out to U.S. independent oil producers for an ongoing dialogue over the last few years at CERAWeek, though the latter have been wary of discussing those meetings, not wanting to be seen as engaging in conversations that could be viewed as anticompetitive.
Fewer shale executives are featured among CERAWeek’s headline speakers at this year’s conference, while oil ministers from Saudi Arabia and Kuwait, two of the most prominent OPEC nations, are not at CERAWeek.
On Jan. 1, OPEC and its allies began new production cuts to avoid a glut that could pressure prices. The group agreed to reduce supply by 1.2 million barrels per day (bpd) for six months.
A senior Gulf oil official said on the sidelines of CERAWeek on Monday that OPEC in April will talk about the supply-demand balance and “will continue cutting (production).”
“We want to see commercial stocks down,” he said, adding that global crude and oil products stocks should fall back to a five-year average, a target the group had set to drain a global oil glut.
On Monday, OPEC representatives huddled with more than 20 members of top energy investors. One participant who attended the meeting said there were questions about antitrust legislation that would target OPEC currently making its way through Congress, and that it could potentially hurt shale companies as well.
OPEC and allies including Russia – known as the OPEC+ alliance – will meet in Vienna on April 17-18, with another gathering scheduled for June 25-26.
Sources recently said the most likely scenario is that the supply cuts will be extended in June but much depends on the extent of U.S. sanctions on OPEC members Iran and Venezuela.
Saudi Oil Minister Khalid al-Falih told Reuters on Sunday the April meeting likely would be too soon to change the group’s output policy and that China and the United States would lead healthy global demand for oil this year.