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While OPEC is still struggling to get all its members on the same page regarding the promised production cuts, UAE Energy Minister is calling non-OPEC oil producers to join the fight, including Russia and even US shale.
“It takes more than OPEC to stabilize the market – there is a realization that other big players need to do their jobs” including US shale, United Arab Emirates Energy Minister Suhail Mohammed Al Mazrouei said to Bloomberg Television on Wednesday. "If we all collectively agree that there is an oversupply then we need to collectively participate in fixing this. We are sending an open invitation to everyone."
And while almost everyone—including many US shale players—would agree that there is an oversupply pressing down prices, the typical M.O. of the US is to let the market dictate price, and let the chips (or shale players) fall where they may.
On Thursday, US Energy Secretary Ernest Moniz, who prefers the phrase “market price” to “low price” in reference to today’s $50 oil, emphasized in a separate Bloomberg interview his commitment to “market forces”.
“We think there should not be a setting of quotas by various countries, as is being discussed,” Moniz said, adding that the US has said as much to the Saudi Energy Minister during previous dialogues.
Moniz pointed out that the market was already in the process of correcting itself, which can be seen by the drop is US production from 9.4 million barrels a day in 2015, to an extrapolated average of 8.6 million to 8.7 million per day in 2016—a natural decline driven by the lower (or market) prices.
Russia and US shale aside, OPEC still has a long way to go internally to hash out an agreement, what with OPEC still squabbling over even the starting point for OPEC negotiations—what September production numbers really were—a small detail that could mean a half-million-barrel swing over what figures to use for Venezuela and Iraq September production. The September production numbers, if they are ever agreed upon, will be used to determine production levels going forward after the 30 November meeting.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.