In an unprecedented move, OPEC has reached out to US shale oil producers and the energy regulator for the state of Texas about possible cuts to oil production.
As the world’s largest consumer of oil, the US generally prefers to let oil producers determine their production levels. President Donald Trump has been particularly critical of OPEC in the past for cutting production and driving up prices. The coronavirus outbreak, however, has severely impacted the demand for oil and caused prices to plummet since the beginning of the year.
Now it seems the US may coordinate with OPEC in production cuts in an effort to bring some stability to the oil markets. OPEC Secretary General Mohammed Barkindol recently met shale executives and Ryan Sitton about possible cooperation. Sitton is a member of the Texas Railroad Commission, which no longer regulates railroads but rather the sizeable oil and gas industry in the state.
Sitton said about a possible deal with OPEC:
“I’m as ardent a free-marketeer as you’ll meet. I’m not going to negotiate with OPEC in a vacuum, in the end it’s up to President Trump. What I’m offering him is that if he wants to get a deal done…Texans will get around the table.”
Not everyone seems to be on board, though. The American Petroleum Institute—which represents oil majors like ExxonMobil, the company behind the Mobil lubricant brand, and smaller independents—dismissed the idea of shadowing OPEC, saying that it believed that efficient production is punished through quotas.