The following is an excerpt from Rania El Gamal, Alex Lawler | January 9, 2018 | reuters.com |
DUBAI/LONDON (Reuters) - Oil’s price rally this year to its highest since May 2015 may seem a source of glee for OPEC, but some in the producer group fear the gains could prompt shale companies to crank open their spigots and flood the market.
Benchmark Brent crude rose further above $68 a barrel on Tuesday, supported by oil output cuts led by the Organization of the Petroleum Exporting Countries and allies including Russia that are due to run until the end of 2018.
The surge comes as a welcome boost for the revenues of oil-producing nations, many still reeling from a price collapse that started in mid-2014 when crude began to fall steeply from above $100 per barrel due to oversupply.
Some in OPEC are worried a prolonged rally could stimulate more U.S. shale oil output, however, creating more oversupply that could weigh on prices and market share.
“We all are excited about the rally and want to see if it will be sustainable during the year, as it will certainly whet the appetite of shale producers,” an official from an OPEC country said.
The oil minister of Iran, OPEC’s third-largest producer, said on Tuesday that the organization’s members were not keen on increased prices as such gains would encourage more shale production.
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