OPEC’s decision to continue pumping crude in the face of collapsing prices is hurting the US shale-oil industry, leading to a rethink on investments by those players, the oil cartel’s chief said on Sunday.
Reduced investments by the shale-oil sector could lead to a supply shortage that will push global oil prices higher again, Abdalla Salem el-Badri said, according to the Wall Street Journal.
“Projects are being canceled. Investments are being revised. Costs are being squeezed,” the OPEC secretary general was quoted as saying Sunday at the Middle East Oil and Gas conference in Bahrain.
“If we don’t have more supply, there will be a shortage and the price will rise again,” he said.
Brent crude, the global benchmark, was trading at about US$60 a barrel on Friday, an amount that is almost half its price last July.
Saudi Arabia’s oil minister Ali al-Naimi denied last week that OPEC nations were at war with US shale producers, saying that they welcomed them to the market.
OPEC chief el-Badri echoed those remarks but pointed out that US shale is costly to produce. Saudi oil, by contrast, is cheaper to pull out of the ground.
“When OPEC didn’t reduce its production, everything collapsed for the US shale-oil-rig market,” he said.
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