OPEC's top official said Sunday that the cartel's decision to
keep pumping crude in the face of collapsing prices was hurting the
U.S. shale-oil industry and that a global pullback on investment
could lead to a shortage that will push the market upward
again.
"Projects are being canceled. Investments are being revised.
Costs are being squeezed," said Abdalla Salem el-Badri, the
secretary general of the Organization of the Petroleum Exporting
Countries, at the Middle East Oil and Gas conference in Bahrain.
"If we don't have more supply, there will be a shortage and the
price will rise again."
Other top officials at the conference said they would maintain
their response of continuing to pump in the face of collapsed
prices caused in part by a glut of U.S. shale oil--a relatively new
product obtained through hydraulic fracturing, or fracking, of
shale rock formations underground. Brent crude, the global
benchmark, was trading at about $60 a barrel on Friday, an amount
that is almost half its price last July but that officials in
places like Kuwait say they can live with.
"We are very lucky oil prices did not drop to $20," said Kuwait
Oil Minister Ali al-Omair.
Statements from OPEC's leaders have been closely watched since
November, when the petroleum cartel decided to keep pumping oil at
the same level rather than cut production to spur prices upward.
Its next meeting is in June in Vienna.
Saudi Arabia's oil minister Ali al-Naimi denied last week that
OPEC nations were at war with U.S. shale producers, saying they
welcomed them to the market. Mr. el-Badri echoed those remarks, but
noted that U.S. shale was costly to produce. Saudi oil, by
contrast, is cheaper to pull out of the ground.
"When OPEC didn't reduce its production, everything collapsed
for the U.S. shale-oil-rig market," he said. Separately, asked if
the U.S. as a rising producer could be part of OPEC, he said "they
are welcome to join if they want to."
The U.S. bans the export of most petroleum products and hasn't
expressed a desire to join OPEC.
Write to Benoit Faucon at Benoit.Faucon@wsj.com and Summer Said
at Summer.Said@wsj.com
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