"Leave Us Alone" - Saudi Oil Minister Slams Shale Hype

Authored by Nick Cunningham via OilPrice.com,

“Leave us alone and leave all these issues. We had enough of shale oil and talks of shale. Please talk about anything else,” Saudi oil minister Khalid al-Falih said in Davos, snapping at reporters.

Al-Falih has clearly become annoyed at all the pestering from reporters and market analysts about the prospect of U.S. shale spoiling OPEC’s plans this year. He put on a brave face and dismissed questions about OPEC losing market share as U.S. drillers continue to ramp up. “The market is in an excellent condition, the demand and supply are good, the inventories are good,” he said, according to the WSJ. “I told you I was relaxed, and I’m still relaxed about the meeting.”

His testy response won’t kill rumors about discord growing from within OPEC. In fact, the WSJ reported that a delegate from an unnamed OPEC country said that falling shipments to the U.S. are a concern. The delegate said that OPEC’s leadership “needs to make some progress on addressing shale.”

But al-Falih didn’t want to hear any of it, and he blamed reporters for stirring up controversy where he says there wasn’t any to begin with. “Why are you all excited all of a sudden on shale? You know why, because you like to chit chat … you are an agent of disturbance,” he said, pointing to a reporter.

At a panel event at the World Economic Forum in Davos, Switzerland, al-Falih said that the IEA is overhyping the impact of U.S. shale.

“I was not disputing the amazing revolution of shale … [but] in the overall global supply demand picture it’s not going to wreck the train,” al-Falih said, claiming that the IEA is overstating the role of shale in a global market.

“We should not be scared,” he added. “That’s the core job of the IEA, not to take it out of context.”

The comments come a week after the IEA published its January Oil Market Report, in which it said that “explosive” shale growth, combined with production gains in Canada and Brazil, would “far outweigh” any declines from Venezuela and Mexico. The conclusion was the basis for the IEA predicting non-OPEC supply growth of 1.7 million barrels per day (mb/d) in 2018, a figure that exceeds demand growth of 1.3 mb/d. In other words, the IEA says the oil market will once again be oversupplied, largely because of U.S. shale.

But in Davos, al-Falih was exasperated with those claims. He argued that natural depletion, plus strong demand growth meant that there was plenty of room for new supply, and that shale drillers wouldn’t crash the market. He criticized the IEA for an “oversized focus” on U.S. shale.

With some unfortunate timing for him, the EIA published production figures for the week ending on January 19, which showed a massive jump in output to 9.878, an increase of 128,000 bpd from a week earlier. That puts U.S. production at another record high, although it should be noted that these weekly estimates are subject to revision. Nevertheless, the EIA sees U.S. oil production passing 10 mb/d in February, scaling up to 11 mb/d by the end of 2019.

Still, al-Falih expressed resolve, stating that it would be “very unlikely” that the OPEC/non-OPEC coalition would abandon their production cuts at their upcoming meeting in June. Earlier in the week, al-Falih said that Saudi-Russian cooperation in the oil market would last for “decades and generations,” and that he wanted to work out a more permanent framework for OPEC coordination beyond 2018.

The comments from al-Falih were quickly met with pushback from the IEA’s top officials. IEA executive director tweeted on Thursday a not-so-subtle dig at al-Falih: “Delighted to participate in this stimulating discussion about the future of energy markets. @IEA analysis has been consistent for many years about the shale oil and gas revolution in the United States and its impact on global markets.”

The IEA’s head of oil division, Neil Atkinson, also rejected al-Falih’s characterization that the IEA has overhyped shale. “U.S. shale in the past decade is one of the biggest game changers in oil production history and it's leading 1.7 mb/d of non-OPEC growth in 2018. Other countries e.g. Brazil and Canada are growing fast too,” he said in a tweet on Thursday.

Comments

Ignorance is bliss dasein211 Fri, 01/26/2018 - 11:22 Permalink

Cool. Let me know how Solar is going to get that semi truck down the road, or that mining equipment to haul thousands of tons of rock each day. FYI..you need silver for solar panels. How about all that big agricultural equipment that makes food in America possible? Help me understand why Solar is less the 1% of the energy grid in the U.S. Maybe you should stop reading about Elon Musks promises and get real. Solar is B.S. and there isn’t enough oil in the ground to build your solar Utopia.

In reply to by dasein211

Terminaldude dasein211 Fri, 01/26/2018 - 12:17 Permalink

Let's hope so.  For the same price or cheaper, who wouldn't want less pollution without costing more.  It's a no brainer.  Whether it will be in my life time or not is the question.  I remember in the 1960's and 70"s, talk of electric vehicles and solar energy being in every home by the turn of the century.  Not quite there yet.

Sounds good though.

In reply to by dasein211

Secret Weapon Fri, 01/26/2018 - 10:25 Permalink

Ok, lets talk about how you are pumping 9 gallons of water to get one gallon of oil.  No, wait, lets talk about how you pieces of shit actively funded the 9/11 attacks. 

buzzsaw99 Fri, 01/26/2018 - 10:32 Permalink

it's gotta suck for them to be not participating in this great economy we keep hearing about.  also, it sounds like they wouldn't mind having some more of those "weak" american dollars.

Ignorance is bliss Fri, 01/26/2018 - 10:37 Permalink

Mexico only has 8 years of proven oil reserves and that's probably an exaggeration. Mexicans on average pay $3.75 a gallon for gas, but only make $15K per year. Right now we are seeing record gasoline theft and a raging black market for cheap gasoline. Pemex continues to decline and hemorrhage debt. Once it crashes we will have a failed state on the Southern U.S. border rivalling Venezuela. What people don't consider is that Mexico is the U.S.'s third largest trading partner and they export around $250 Billion in food produce to the U.S. annually. They are also the largest silver mining country in the world. So, you can expect Silver and food production to decline as gasoline prices continue to surge within Mexico. That could be the real reason Trump wants a wall. He wants to contain the mass wave of economic refugees sure to hit our southern borders.

Elvis is Alive Fri, 01/26/2018 - 10:42 Permalink

Biggest issue with shale is how few other countries are doing it. Once other countries in Europe, South American, and Asia start investing in shale, the Saudi empire will be finished. Then we can start to view the hell that is the Middle East in the same way we do Africa. 

Solio Fri, 01/26/2018 - 11:20 Permalink

We're getting to the point where there is little difference between water and oil.

 

It takes clean water for life to thrive.

HominyTwin Fri, 01/26/2018 - 11:23 Permalink

Shale is a ponzi enabled by cheap financing/interest rates, which the Saudis enabled with the petro dollar. Duh. Policies have consequences. Suck on all those big, hard consequences, fucking stupid raghead.

Ink Pusher Fri, 01/26/2018 - 11:36 Permalink

This is going to continue until OPEC and NOPEC screw the "deal" in early Q3 and set up for the Q4 bloodbaths.

I think I am going to buy a mop and bucket company today.

sowhat1929 Fri, 01/26/2018 - 11:52 Permalink

He's right, the IEA is full of shit---constantly hyping shale and underestimating demand.  We are in a world of energy hurt, the wave has just not hit yet. Shale is not going to save us from the shortages coming next year!

Umh Fri, 01/26/2018 - 11:57 Permalink

I think the US should let other countries fuck up their environment, but no we seem to want to make a big mess for no really good reason.

MrNoItAll Fri, 01/26/2018 - 14:23 Permalink

Shale is nothing but a hype and propaganda driven money hole, where freshly created digi-bucks go to die. SA never did worry about shale, they had no reason to worry, and they still don't. The whole Saudi vs American shale narrative was never anything but a piece of the elite master plan to hype the shale oil industry. The shale hype is all about keeping the Ponzi going, nothing else. It keeps a lot of people working, for now, but it is most definitely not a viable business. I agree with Saudi oil minister -- please, cut the crap. Shale oil business is DOOMED.

dunce Sat, 01/27/2018 - 01:11 Permalink

He said nothing but the truth. The market is balanced and they do not actually need $100 a barrel oil. The prices are rising and are likely to continue the same trend.