U.S. Oil Boom Divides OPEC
The American energy boom is deepening splits within the Organization of the Petroleum Exporting Countries, threatening to drive a wedge between African and Arab members as OPEC grapples with a revolution in the global oil trade.
OPEC members gathering on Friday in Vienna will confront a disagreement over the impact of rising U.S. shale-oil production, with the most vulnerable countries arguing that the group should prepare for production cuts to prop up prices if they fall any lower. « We are heading toward some problems, » said a Persian Gulf OPEC delegate.
While Saudi Arabia can tolerate lower prices, « there will be some members, like Venezuela, Iran who will struggle at $90, » said Amrita Sen, chief oil analyst at London-based Energy Aspects Ltd. The front month Brent contract for July settled at $102.62 a barrel Monday. Venezuela’s oil minister said on Monday that he would push for a cut in OPEC production if oil falls below $100 a barrel.
Nigerian oil minister, Ms. Alison-Madueke, sees danger for her country. « Shale oil has been identified as one of the most serious threats for African producers, » she said in the U.K. this month. Those producers, she said, could lose 25% of their oil revenue as they are edged out of the U.S. OPEC officials said the group is preparing studies to evaluate the impact of U.S. shale oil on demand for its crude. « Definitely, we will review nonconventional shale oil from the U.S., » said Mr. Khatibi, the Iranian envoy.
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