By Sarah Kent
VIENNA--Oil markets have entered into a period of lower, more
volatile, prices thanks to the rise of shale oil, the chief
executive of oil giant Eni SpA (ENI.MI) said Wednesday.
The rapid increase of U.S. shale oil production has roiled oil
markets and helped push prices sharply lower over the last year.
Already that's causing the rise in U.S. output to tail off.
Because shale oil production is highly responsive to prices, the
market is entering a new phase of w-shaped peaks and troughs,
Claudio Descalzi said.
The Italian oil company CEO urged the industry to respond to
this new environment by changing its model. International oil
companies should look to drive down and control costs, while
governments in producing countries should also be flexible with
their contract terms to reflect the weaker market environment, he
said.
"The industry needs to recover profitability. The situation
doesn't require a simple cut in capital expenditure, but a deeper
revision of the model," Mr. Descalzi added.
Write to Sarah Kent at Sarah.Kent@wsj.com
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