Speaking in Davos at the World Economic Forum, Saudi Energy Minister Khalid Al-Falih hit back at claims that increasing US shale production will jeopardise OPEC’s efforts to rebalance the oil market.
In its January Oil Market Report, the IEA pointed out that dramatic growth in US shale oil production, alongside increased production in Brazil and Canada, would more than compensate for any reduced production in Mexico and Venezuela. This led the organisation to conclude that an increase in non-OPEC supply of 1.7 million bpd (barrels per day) in 2018, driven mostly by US shale, will exceed the predicted demand growth of 1.3 million bpd. This means the market would be in danger of becoming oversupplied once more.
Al-Falih dismissed these concerns when questioned during a panel event at the World Economic Forum. He instead posited that strong demand growth paired with the natural depletion of existing wells would create ample room for new production. He argued:
“I was not disputing the amazing revolution of shale . . .[but] in the overall global supply demand picture, it’s not going to wreck the train.”
He also pointed out that the IEA may be overestimating the effect of shale on the global market and added:
“That’s the core job of the IEA, not to take it out of context.”
The IEA currently expects total US oil production to surpass 10 million bpd in February as shale operators like ExxonMobil, the maker of high-performance greases like Mobilith SHC PM 460, up production to take advantage of the recent recovery in oil prices.