On Tuesday, OPEC Secretary General Mohammed Barkindo called on the shale oil producers in the U.S. to curtain the global supply of oil, warning that extraordinary measures may be necessary in 2018 to sustain the current rebalanced market for the medium and long term.
Barkindo said that the oil cartel is urging it friends in the North American shale basin to take the shared responsibility with the seriousness that it deserves, as one of the important lessons that has been learned from the current supply-driven cycle.
The comments from the top official in the Organization of the Petroleum Exporting Countries came during his speech in New Delhi during the India Energy Forum.
At the current time, OPEC and independent producers in the U.S. both agreed there is a shared responsibility in keeping stability because they are not insulated from an impact of the downturn. He was referring to a drop in prices of oil that caused OPEC to declare a production cut late in 2016.
While OPEC and a few other producers, including the likes of Russia have lowered supplies in 2017 to prop prices up, production in the U.S. has soared nearly 10% in the same period, driven mostly by the shale drillers.
Barkindo said he is hoping that the new producers, not only shale drillers in the U.S., would join in on cuts of production.
Saudi Arabia on Monday cut allocations of crude oil for November by more than 560,000 barrels per day, which is in line with the commitment by the kingdom to pact for reducing supply.
In the last four months, there has been destocking of more than 130 million barrels daily said Barkindo.
The goal of OPEC and those in the pact with the kingdom is trim the supply of oil in the OCED industrialized countries in comparison to the supplier average for the past five years.
Barkindo indicated that the stock overhang to the average of five years was 171 million barrels during August, against the 338 million when the year began.
On Sunday, the OPEC secretary general said that the oil cartel along with other producers might find it necessary to take extraordinary measures in 2018 to rebalance the overall oil market.
In 2017, the oil demand growth across the globe is expected to be 1.45 million barrels per day, and should remain at 1.4 million during 2018, said Barkindo. He added that the share of oil demand in India is expected to increase to more than 9% before 2040, up from its current 4%.