IEA Chief: Oil Price Slump Yet To Hit US Shale Oil Production
LONDON, Oct 13 (Reuters) - The vast majority of shale oil in the United States is produced at costs far below the current price of crude, the head of the west's energy watchdog said, which means U.S. projects can withstand the market slump squeezing other producers.
Brent oil stands at around $88 per barrel, down more than 23 percent from the year's peak above $115 in June, raising concern that some shale oil projects will become un-economic.
However Maria van der Hoeven, executive director of the International Energy Agency said that only a tiny minority of shale oil production would be affected by the slump in prices to near-four-year lows.
"Some 98 percent of crude oil and condensates from the United States have a breakeven price of below $80 and 82 percent had a breakeven price of $60 or lower," she told Reuters in an interview on the sidelines of the launch of the Africa Energy Outlook publication.
Saudi Arabia is quietly telling oil market participants that Riyadh is comfortable with markedly lower oil prices for an extended period, a sharp shift in policy that may be aimed at slowing the expansion of rival producers including those in the U.S. shale patch.
Some OPEC members are clamouring for urgent output cuts to push global prices back up above $100 a barrel as they rely heavily on oil exports to balance their budgets, but others like the Saudis are thought to be more relaxed.
Van der Hoeven said the fall in the oil price would provide a welcome economic boost for economies which are heavily reliant on oil imports.
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