The secretary general of the Organization for the Petroleum Exporting Countries (OPEC) is calling on U.S. unconventional producers to help reduce the global oil surplus.
Mohammad Sanusi Barkindo made his remarks at the India Energy Forum in New Delhi at IHS Markit’s inaugural CERAWeek in India. The U.S. counterpart is held annually in Houston.
Even with rising demand from India and emerging countries, the global oil surplus remains too high, Barkindo told the audience.
OPEC, which controls about 60% of global oil output, and some of its allies agreed in May to extend supply reductions for another nine months beginning July 1. The agreement was a bet that worldwide prices would trend higher as the market rebalanced, but higher prices have failed to materialize.
Efforts by OPEC and non-OPEC producers to conform to the production adjustments “have been fruitful and worthwhile,” Barkindo said. Worldwide oil demand growth this year also “is better than expected,” with the 2018 demand outlook “anticipated to be quite robust at similar levels, of above 1.4 million b/d.”
The oil supply overhang is persistent, however. OPEC and its non-OPEC partners, which include Russia, have “reaffirmed the broader commitment to joint action by all for the market stability beyond the short-term.
“We all remain confident that the recent extension of the terms of the declaration through to early 2018 is already accelerating the rebalancing process as confirmed by the latest monthly data,” Barkindo said.
“Emerging from this most vicious of all oil cycles, the need to sustain the rebalanced market in the medium- to long-term, some extraordinary measures could be considered by countries participating in the Declaration of Cooperation, including expanding the membership.
“This is a shared responsibility of all producers, be they conventional or non-conventional, short- or long-cycle investors. We all, at the end of the day, when all is said and done, belong to the same industry and operate in the same markets.”
OPEC is urging “our friends in the shale basins of North America to take this shared responsibility with all the seriousness it deserves, as one of the key lessons learned from the current, unique supply-driven cycle.”