Saudi Energy minister Prince Abdulaziz bin Salman shakes hands with staff during his visit to an Aramco oil facility one day after the attacks in Abqaiq, Saudi Arabia September 15, 2019.
Saudi Press Agency | Reuters
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman played down any rivalry between U.S. shale producers and more established oil producers in the Middle East.
Speaking to CNBC’s Hadley Gamble following an OPEC decision in Vienna, Austria, on Friday, Abdulaziz said: “They (U.S. shale producers) didn’t do anything wrong, they produced more barrels, they put the U.S. on the map in terms of its energy requirements, they are growing the economy, they are creating jobs.”
The U.S. is now the world’s largest oil producer hitting 12.3 million b/d in 2019, according to the U.S. Energy Information Administration, up from 11 million b/d in 2018. It now produces more oil than Saudi Arabia and Russia, although there are signs that production growth is slowing in the States.
Due to the boom in U.S. shale production, alongside other factors, the OPEC energy alliance was prompted to act after global oil prices tumbled in mid-2014. U.S. shale producers were not part of that deal and shale oil supply grew exponentially as OPEC producers curbed output.
“They did a remarkable job,” Abdulaziz told CNBC regarding the U.S. energy industry. He spoke of “legal limitations” when asked whether there could be pact with shale producers in the future, but said that Saudi Aramco — his country’s state-owned oil firm — “would go more and more international.”
In May, Aramco signed an agreement to buy U.S. liquefied natural gas from San Diego-based utility Sempra Energy, which helped to advance its ambitions to become a player in the growing international gas market.
Rampant shale supply and faltering demand due to a global economic slowdown have threatened to unbalance oil supply and demand dynamics. OPEC and non-OPEC allies, often referred to as OPEC+, decided on Friday to implement even tighter oil production policy at the biannual meeting in Vienna.
The new deal, which is much larger than many analysts had expected, will see OPEC+ reduce total oil output by 1.7 million b/d. However, Abdulaziz told reporters on Friday that his country — the de facto leader of OPEC — would also extend a voluntary cut of 400,000 b/d, saying that the energy alliance’s total cuts would effectively amount to 2.1 million b/d.
—CNBC’s Sam Meredith and Holly Ellyatt contributed to this report.