US shale revival likely to limit any major oil price recovery
On Wednesday, the Nigerian oil minister said OPEC members must lower costs of production to better compete with US shale producers.
In an interview with CNBC Africa, Emmanuel Ibe Kachikwu said despite the revival of the shale industry in the United States, he is confident that the OPEC output reduction agreement would help oil prices hold.
Kachikwu added he was “impressed with the work OPEC has done”, but added “What is more fundamental is what OPEC countries can begin to do for themselves in terms of costs, diversifications”.
In 2016, the economy of Nigeria shrunk for the first time in 25 years due to low oil prices. The government of the west African nation relies on crude sales for about two-thirds of its revenue.
Nigeria along with Libya were excluded from the OPEC supply cut deal because both nations suffered production setbacks in 2016. Eleven of the 13 OPEC members signed on to the deal.
The cartel’s agreement to cut production has since prompted oil prices to rise $10 a barrel, but in recent weeks, they have been trading in a narrow $3 range.
Analysts say that a revival in US shale production will likely limit a major price recovery in crude oil.