Shale CEO lauds OPEC’s efforts to rebalance crude oil markets

By Kevin Crowley on 4/7/2021
Oxy drilling crew at work in the Permian basin
Oxy drilling crew at work in the Permian basin

HOUSTON (Bloomberg) - Occidental Petroleum Corp. praised OPEC and its allies for managing crude markets out of last year’s historic crash and said the U.S. shale industry is thankful for its efforts.

“They’ve been brilliant in the way they’ve handled it, the way they’ve been doing it,” Chief Executive Officer Vicki Hollub said at a conference hosted by the Texas Independent Producers & Royalty Owners Association Tuesday. “Every U.S. oil and gas company is appreciating their efforts.”

OPEC+ and U.S. shale have been rivals for much of the last decade, with the Americans’ rapid growth eating away at the cartel’s share of the oil market and power to control it. But the U.S. has lost about 2 million barrels a day, or 15% of its production, over the past year and future growth is severely challenged by producers’ diminished access to capital and shareholder demands for cash returns over more output.

Hollub says “too much investment” would be required for the U.S. to return to its peak of around 13 million barrels a day achieved in the first quarter of 2020. As such, Hollub sees OPEC bringing back some of its curtailed barrels but not enough to exceed global demand in the second half of the year.

“They’re trying to get back to a supply-demand situation,” Hollub said. “Many of the countries worldwide need 60 or 70 or 80 dollars to break even and so ultimately I think in 2022 we’ll get to $70 or better.”

Brent crude has risen about 20% this year to over $62 a barrel.

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