Saudi officials told US-based oil firms in a closed-door meeting last week that OPEC wouldn't extend production cuts to offset higher output from American shale producers, Reuters reported Thursday, citing unnamed sources.
Speaking at an industry conference in Houston, the kingdom’s energy minister Khalid Al-Falih said there would be no "free rides" for US shale firms benefiting from higher prices.
The minister’s senior advisors also met with executives from Anadarko, ConocoPhillips, Occidental Petroleum Corp, Pioneer Natural Resources, Newfield Exploration, and EOG Resources, it was reported.
"One of the advisors said that OPEC would not take the hit for the rise in US shale production," a source said, adding that the advisor warned shale producers to “not automatically assume OPEC will extend the cuts.”
OPEC and non-member oil producers, led by Saudi Arabia and Russia, agreed last December to cut production by a combined 1.8 million barrels as part of efforts to shore up prices and ease the global crude supply glut. The resulting increase in prices has been offset by higher output from US shale producers.
US crude stockpiles jumped by 8.2 million barrels in the week to March 8, data from the Energy Information Administration (EIA) showed, causing oil prices to tumble 5 percent on Wednesday.
Total inventories have now hit new record high levels four weeks running and stockpiles have increased by nearly 50 million barrels since the start of 2017.
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