Al-Naimi: OPEC ‘must combat US shale boom’

Updated 30 November 2014

Al-Naimi: OPEC ‘must combat US shale boom’

Petroleum and Mineral Resources Minister Ali Al-Naimi told fellow OPEC members in Vienna that they must combat the US shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers.
Ali Al-Naimi won the argument at Thursday’s meeting, although ministers from members such as Venezuela, Iran and Algeria had wanted to cut production to reverse a rapid fall in oil prices.
A Gulf delegate told Reuters that Al-Naimi had reassured members that the oil price would recover as demand will ultimately pick up. But he insisted that if OPEC cut output it would lose market share.
“Reaching a final decision took a lot of time convincing the others,” said another delegate.
Some members were not prepared to offer big cuts themselves, and, choosing not to clash with Saudi Arabia and their allies, ultimately agreeing to Al-Naimi’s suggestion.
“Al-Naimi spoke about market share rivalry with the US. And those who wanted a cut understood that there was no option to achieve it because Saudi Arabia wants a market share battle,” a source, who was briefed by a non-Gulf OPEC minister after Thursday’s meeting, told Reuters.
Oil hit a fresh four-year low below $72 per barrel on Friday.
A boom in shale oil production and weaker growth in China and Europe have sent prices down by over a third since June.
Secretary General Abdullah Al-Badri effectively confirmed OPEC was entering a battle for market share.
Asked on Thursday if the organization had a answer to rising US production, he said: “We answered. We keep the same production. There is an answer here.”
OPEC agreed to maintain — a ‘rollover’ in OPEC jargon — its ceiling of 30 million barrels per day, at least 1 million above its own estimate of demand for its oil in the first half of next year.
“We are together,” said Venezuelan Foreign Minister Rafael Ramirez when asked whether there was a price war within OPEC.
“OPEC is always fighting with the US because the US has declared it is always against OPEC... Shale oil is a disaster as a method of production, the fracking. But also it is too expensive. And there we are going to see what will happen with production,” he said.
Analysts, quoted by Reuters, said the decision not to cut output in the face of drastically falling prices was a strategic shift for OPEC.


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.