With output hikes, OPEC+ again targets US shale oil

#output #hikes #OPEC #targets #shale #oil

Moscow/London: Following a plan to increase OPEC+oil production and punish more productive allies, group leaders Saudi Arabia and Russia are pursuing another goal: fight US shell production to win market share from the United States.

10 years ago, OPEC’s final price war against US producers ended in failure, as technology and drilling achievements allow us to reduce shell companies, compete at low prices and take market share from the 12 -member group in the coming years.

However, US production is now more at risk for pricing war. US shell producers have seen increased costs over the past three years. The decline in oil prices globally is also decreasing.

Reuters spoke to Saudi Arabia or Russia’s 10 OPEC+ delegates and industry sources about their production strategy.

According to four of the 10 sources, the recovery of some May 3 shares is a motivator for the decision to bring back May 3 more faster than production, though no one has said that the strategy has yet created a price war.

Sources said that today, to hurt the shell producers, OPEC+ will need to reduce oil prices by $ 65- $ 60 per barrel at their current level, sources said, adding that they all refused to identify because of the sensitivity of the matter.

“The idea is that prices by others have to put a lot of uncertainty in pricing, with others,” said Saudi Arabia’s briefing, “said Saudi Arabia’s briefing said.

The Saudi Government Communication Office, Russian Deputy Prime Minister Alexander Novak and the OPEC office did not respond to the requests for comment.

OPEC+, which includes OPEC members and fellow producers like Russia and Kazakhstan, cited the basic principles of the current healthy market, as appeared in low inventions of oil, as the reasoning for its production decision.

OPEC+ Output increases, however, the biggest American oil field also comes as the best quality shell areas in Perman. When the producers move towards the secondary areas, the cost of production is increasing. Inflation has increased these costs.

According to a first -quarter Dallas Federal Reserve survey of more than 100 oil and gas companies in Texas, New Mexico and Louisiana region, shell producers now need an average of $ 65 a barrel to drill a profitable drill. In contrast, analysts estimate that Saudi production costs $ 3- $ 5 a barrel and Russia is at $ 10- $ 20.

The last producer stands

At its peak, OPEC production was more than half of the global oil. But according to OPEC statistics, only a decade ago this year is decreasing by 40 % of the market share, while the United States share has increased from 14 percent to 20 percent.

Combined with non -OPEC allies, OPEC+ produces some 48 % of global oil.

After the increase in production, 5.85 million barrels daily – or 5.0 % of global demand – in the last five years to balance the market, when the US shell output has increased, OPEC+ is now increasing.

“It’s time to return the lost market share,” one of the OPEC+ sources told Reuters.

Saudi Arabia says its low production costs mean that it will be the last producer standing in any competition.

And sources told Reuters that Moscow has gradually come close to the Saudi strategy to pump more oil to punish OPEC+ members such as Iraq and Kazakhstan for more production, and under pressure, shell producers, including shale producers.

“The main source of imbalance in the oil market comes from the American shell growth,” said a high -level Russian source.

Sources added that oil prices are less than $ 60 a barrel.

Everyone hurts

World Oil Benchmark Brent LCOC1, after trading within a tight band of a barrel of $ 70- $ 80 in most parts of the previous year, OPEC+ output rose to $ 58 a barrel at the lowest level in April at the lowest level in April.

With an operation in Pirman Basin, one of the largest private American raw producers, Surge Energy CEO, Lehwa Guan, said that time could not be worse for US producers.

US oil production is likely to fall this year before, as high quality inventory has been excavated, he said. Guan added that the US administration’s tariff policies and the consequent fluctuation market are expected to go bankrupt in the entire industry.

“OPEC+ hiking production is taking market share with American shell producers,” he said.

According to Baker Hughes, earlier this month, since January, the counting of American oil and gas veins came to its bottom.

Shell firm Diamondback Energy reduced its production forecast for 2025 earlier this month, saying that the global economic uncertainty and the growing OPEC+ supply have brought us oil production to an important place.

And Konoko Flips warned last week that a large number of prices per barrel could also decrease a massive activity in large -scale athletes.

But prices wars hit everyone.

Although oil companies are under pressure to reduce capital costs, jobs and profits, lower prices to countries that rely on oil revenue under financial pressure.

The International Monetary Fund estimates that Russia needs more than $ 77 oil prices per barrel to balance its budget. For Saudi Arabia, that number is more than $ 90 a barrel.

OPEC+ does not have a pricing target, but officials regularly distribute views about price levels and industry and global economy implications.

In this indicator it is developed at least some prepared for some pain, Saudi officials have informed allies and industry experts that it considers a barrel of $ 60 per barrel, even if it has to borrow more to balance its budget.