Saudi energy minister defends US shale producers: 'They are creating jobs'

  • The U.S. is now the world's largest oil producer hitting 12.3 million b/d in 2019, according to the U.S. Energy Information Administration, up from 11 million b/d in 2018.
  • It produces more oil than Saudi Arabia and Russia now, although there are signs that production growth is slowing in the States.

Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman played down any rivalry between U.S. shale producers and more established oil producers in the Middle East.

Speaking to CNBC's Hadley Gamble following an OPEC decision in Vienna, Austria, on Friday, Abdulaziz said: "They didn't do anything wrong, they produced more barrels, they put the U.S. on the map in terms of its energy requirements, they are growing the economy, they are creating jobs."

The U.S. is now the world's largest oil producer hitting 12.3 million b/d in 2019, according to the U.S. Energy Information Administration, up from 11 million b/d in 2018. It produces more oil than Saudi Arabia and Russia now, although there are signs that production growth is slowing in the States.

Due the rise in U.S. shale production, alongside other factors, the OPEC energy alliance was prompted to act after global oil prices tumbled in mid-2014. U.S. shale producers were not part of that deal and shale oil supply grew exponentially as OPEC producers curbed output.

Along with rampant shale supply, faltering demand due to a global economic slowdown, exacerbated by the Sino-U.S. trade war, has once again threatened to unbalance oil supply and demand dynamics.

His words come after OPEC and non-OPEC allies, often referred to as OPEC+, decided to implement tighter oil production policy at a biannual meeting in Vienna, Austria.

The new deal, which is much larger than many analysts had expected, will see OPEC+ reduce total oil output by 1.7 million b/d. However, Abdulaziz told reporters on Friday that his country — the de facto leader of OPEC — would also extend a voluntary cut of 400,000 b/d, adding that the energy alliance's total cuts would effectively amount to 2.1 million b/d.

The energy alliance has said it plans to review the policy at an extraordinary meeting on March 5-6.

The energy alliance was prompted to act after global oil prices tumbled in mid-2014 due to an oversupply, but U.S. shale producers are not a part of the deal and shale oil supply has grown exponentially.

—CNBC's Sam Meredith and Holly Ellyatt contributed to this report.

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