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LONDON: OPEC Secretary Mohammad Barkindo said there was no aim to drive US shale oil producers out of business, after the price of US barrels briefly turned negative in April.
He was speaking in a CERAWeek interview ahead of next week’s OPEC+ market monitoring panel meeting. The Organization of the Petroleum Exporting Countries (OPEC) and other exporters including Russia are collectively known as OPEC+. In April the group agreed the single largest output cut in history in response to plunging oil prices that followed in the wake of the coronavirus pandemic.
“There is no objective whatsoever from us as a group or as individual countries to drive US shale production out of business,” said Barkindo. “No. It is not in our interest to do that. It is not in the interest of the global industry to do that. Without the US shale probably, we could have entered into a worse crisis than we are seeing in this pandemic.”
It costs more for US shale drillers to produce oil than their conventional counterparts in OPEC, so the slide in prices this year has had a devastating impact on that industry. The situation reaching crisis point on April 21 when storage space at Cushing in Oklahoma, the main delivery point for US light sweet crude oil, became full, forcing prices to turn negative for the first time ever.
Barkindo said OPEC had established a line of communication with US independent producers and thanked both the US and the G20 for helping to “restore communication” between OPEC+ producers.
Oil prices dipped on Thursday amid concerns about the renewed spread of the coronavirus in the US and other countries.Brent crude was down about 0.2 percent to $43.20 in early afternoon trade in London while US WTI also dipped by about 0.7 percent to $40.59.