Very usefull links


News links




Dow Jones

Oil price



Views and News






U.S. shale output a definitive warning to OPEC: Kemp




By John Kemp

Petroleumworld 02 08 2018

U.S. crude oil production is set to increase by more than 1.2 million barrels per day in 2018 compared with 2017, according to the latest short-term forecasts from the U.S. Energy Information Administration.

U.S. crude production will average almost 10.6 million barrels per day (bpd) this year compared with 9.3 million bpd in 2017 (“Short-Term Energy Outlook”, EIA, Feb. 6).

The forecast has been revised sharply higher from less than 10.3 million bpd at the time of the last prediction in January 2018 and 9.9 million bpd in July 2017 ( ).

Unexpectedly rapid growth in U.S. onshore production from the Lower 48 states in recent months has caused the agency to re-benchmark its output numbers going forward.

Crude production from the Lower 48 excluding federal waters in the Gulf of Mexico, mostly from shale, is expected to rise by nearly 1.25 million bpd this year.

Total U.S. liquids production, which includes natural gas liquids, is predicted to rise by 1.7 million bpd in 2018, which is exactly the same as the forecast increase in global liquids consumption.

If the forecasts prove correct, U.S. shale producers will capture all or most of the predicted growth in global oil consumption this year.


Surging output from shale underscores the growing competitive threat to members of the Organization of the Petroleum Exporting Countries and its allies led by Russia.

Efforts to restrain production under the cooperation framework between OPEC and non-OPEC allies risk back-firing.

The cooperating countries are already conceding market share to the shale producers, in a re-run of the situation before oil prices slumped in 2014.

If production restraint succeeds in drawing down global inventories even further, and pushes Brent significantly above $70 per barrel, the resulting shale surge and slowdown in consumption growth will intensify the danger.

The dilemma between defending prices or protecting market share has been a familiar one for OPEC for the last 40 years, and the organisation has regularly alternated between pursuing these competing priorities.

Saudi-led OPEC focused on defending prices before 2014, then switched to protecting market share between June 2014 and June 2016, before reverting to price defence from December 2016 onwards.

The price defence strategy has worked but is now starting to threaten the organisation's market share and could become counterproductive if carried too far.


OPEC and its allies need to start planning an exit from their production agreement with the goal of capturing at least some incremental market demand in 2018 and 2019 while preventing another slump in prices.

OPEC is focused on maintaining current production through the end of 2018, although it has promised an interim review at the next ministerial meeting in June.

But maintaining production restraint until the end of the year risks tightening the market too much and inviting another shale surge, which would repeat the events of 2011-2014.

Between 2011 and 2014, OPEC members consistently under-estimated the competitive threat from shale, until it overwhelmed them.

Maintaining output restraint for too long this time around would repeat the same mistakes that led to the subsequent slump.

OPEC and its allies must choose between an early, smooth and controlled adjustment to the cooperation agreement or risk a later and more disorderly one.

Story by John Kemp from Reuters
02 07 2018

We invite all our readers to share with us
their views and comments about this article.
Write to

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to:

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels




Editor & Publisher:Elio Ohep/
Contact Email:

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.