By Oil & Gas Financial Journal staff and Wire Reports
The Organization of Petroleum Exporting Countries and its top oil producer, Saudi Arabia, have given indications recently that the cartel may decide to decrease its oil output in the wake of continuing low prices for crude. On the other hand, Russia, another of the world’s largest oil producers, has stated categorically that it will not cut production.
In a recent interview on Russian TV, Alexander Novak, the country’s energy minister, said he thinks that shale production, particularly from North America, is responsible for the current oil surplus and that any cuts in production should come from those producers. He added that those reductions would serve to stabilize and the oil markets.
OPEC countries, which collectively produce about a third of the world’s oil, met in Vienna in November 2014 and decided on a new policy to defend their market share against ever-increasing shale oil production, mainly from North America, instead of cutting back their own production in order to maintain higher prices. Almost immediately, oil markets slumped and prices plummeted.
The Russian minister said he expects US and Canadian production to decline in 2015 and 2016 and to remain at a lower level until global demand, especially in China, picks up. China has surpassed the United States as the world’s largest consumer of energy, but economic growth in that country has slowed considerably in the past year or so.