Saudi Arabia’s Double-Edged Gift for U.S. Shale
The kingdom’s voluntary production cuts give U.S. oil producers breathing room to press on with fixing their problems. But such magnanimity isn’t sustainable.
The recent oil price rally, now provided a further boost by Riyadh, are a boon to the struggling shale producers.
Photographer: Daniel Acker/BloombergSaudi Arabia certainly put the “rollover” in, well, rollover on Tuesday. Having spent most of 2020 playing disciplinarian in the OPEC+ group, the oil giant took the hit itself at the end of the latest meeting. Ostensibly, supply cuts are being rolled over into February and March. In reality, Saudi Arabia will voluntarily cut its own supply, allowing most other members to reap the benefit of higher crude prices — and a select few to enjoy the bonus of loosened output caps, too. And by “select few,” I mainly mean Russia.
But there is one other group that benefits, one that haunts rather than sits at the OPEC+ table: U.S. oil companies.