The Organization of the Petroleum Exporting Countries and allies’ decision to reduce production of crude oil in 2016 and 2020 helped the US shale industry to become one of the leading energy exporters, said Igor Sechin, head of Russia’s largest oil producer Rosneft.
Sechin, speaking at a forum in the United Arab Emirates, said Russia and its partners have made the main contributions to the global energy market stabilisation in the past 10 years, according to a Reuters report.
Sechin, who is a long-standing ally of Russian President Vladimir Putin, had previously expressed scepticism about Russia’s ties with OPEC.
He said that the US benefited most from the deal struck between Russia and OPEC in 2016.
Russia and partners helped in stabilising energy markets
According to the Reuters report, Sechin told the UAE forum that Russia and its partners have helped in stabilising energy markets across the globe.
Reuters quoted Sechin as saying:
OPEC+ decisions to stabilise the oil market in 2016 and 2020 significantly supported the US shale industry.
This year, OPEC and Russia’s efforts to stabilise the oil market and prop up prices have largely been undermined by poor demand growth in China.
China has been struggling with sluggish economic activities, which have weighed on the country’s oil imports. The country is the largest importer of oil.
The International Energy Agency said oil demand growth worldwide is expected to be below 1 million barrels per day next year as supply is likely to outstrip consumption.
The IEA has also said that non-OPEC oil production is likely to increase sharply next year, which would account for most of the growth in supply.
The US is already pumping oil at record levels, and next year production is expected to increase further.
Trump’s policies to boost US oil and gas output
Meanwhile, the US President-elect Donald Trump is in favour of more oil and gas production.
Trump is expected to roll back climate regulations, and allow drilling for oil and gas in federally-owned lands as well as off the coast of the US.
He is also likely to approve a wide-ranging plan for the country’s oil and gas sector that would increase production in the medium to long term.
Under such circumstances, growth in oil supply from the US is expected to rise, eroding further market share from Russia and OPEC+ countries.
OPEC+ meeting in focus
The cartel along with its allies, including Russia will meet via video conference later on Thursday to discuss production policy, starting January.
Experts suggest that the cartel has no choice, but to extend its steep voluntary production cuts of 2.2 million barrels per day as there are concerns of oversupply next year.
The production cuts are set to expire on December 31.
According to Commerzbank AG, OPEC+ may extend these output cuts till the end of March next year.
However, the upside in oil prices may be limited as much of the extensions has already been factored in, analysts said.
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