OPEC Eyes U.S. Shale Oil Boom

The Organization of the Petroleum Exporting Countries could clash over how it responds to the growing challenge from U.S. shale oil.

May 28, 2013

NEW YORK – OPEC could be facing a new internal clash on how it chooses to respond to the increasing U.S. output of shale oil, reports the Wall Street Journal.

“Rising American output is rewriting global oil-trade patterns and deepening existing fault lines within the powerful exporters' group, limiting its ability to mount a collective response — including possible production cuts — ahead of a crucial meeting in Vienna Friday,” writes the newspaper, adding that although no change is expected during the meeting to OPEC’s oil production, it will mark “the first stage of a thorny debate on shale's oil's impact that is already showing signs of dividing the group.”

Nigeria, for example, has deemed U.S. shale oil “a grave concern.” Nigerian oil minister Diezani Alison-Madueke told the newspaper that shale oil “has been identified as one of the most serious threats for African producers.”

The newspaper writes that U.S. crude production has increased to a 21-year high, thanks to new technologies that are tapping into large resources of oil from shale rock in North Dakota and Texas. At the same time, however, exports from three of OPEC's African members, Nigeria, Algeria and Angola, to the U.S. have dropped to their lowest level in decades: 41% in 2012, according to the U.S. Department of Energy. In contrast, Saudi Arabia oil shipments to the U.S. increased 14% in 2012.

OPEC is taking some steps to address this new problem, notes the newspaper, adding that behind closed doors, the group is preparing studies to evaluate the impact of U.S. shale oil on demand for its crude, a topic that will also be discussed at Friday’s meeting. 

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