The U.S. shale industry has found itself caught in the middle of a war over market share between Saudi Arabia and Russian Federation.
The energy market has had to contend with the twin shocks of the demand destruction caused by the coronavirus pandemic and the unexpected oil price war that erupted between producers Russian Federation and Saudi Arabia earlier February.
Texas Railroad Commissioner Ryan Sitton said Friday he was invited by OPEC Secretary General Mohammad Barkindo to attend the group's summer meeting in Vienna.
Saudi Arabia has ordered state-run Aramco to keep output at a record high of 12.3 million barrels a day over the coming months, but in a surprise move Thursday, both the kingdom and Iraq cut the rebates on freight costs they give to customers, effectively lifting prices. US production quotas could create a $5 to $10 upside to Goldman Sachs' West Texas Intermediate price forecast of $40 to $45 a barrel in 2021, the bank said.
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Oil prices have dropped more than 60 per cent since the start of the year, while everything from coal to copper have also been hit by the coronavirus crisis, and bond and stock markets are in rarely charted territory. Most stations in Regina are selling gas for 76.9¢ per litre, when just weeks ago prices were in the $1.00 per litre range.
The plan comes as the nearest timespread for the US benchmark indicated its deepest oversupply since 2016.
Brent, the London-traded global benchmark for crude, settled Friday's trade down $1.49, or 5 percent, at $26.98.
Oversupply is so extreme that regulators in Texas considered curbing production there for the first time in almost 50 years. Sitton proposed a plan in which Texas, the world's third-largest oil producer, to join the two oil superpowers to curb supply, asking for federal support to negotiate with the other countries. Sitton, one of three voting members of the commission, is proposing that the USA coordinate with Russian Federation and Saudi Arabia to curb supply. The sector has so far scaled back operations and is also threatened with a wave of bankruptcies.