Saudi Arabia is Not Worried About Shale Competition

Olivier and Mann - Saudi Arabia is Not Worried About Shale Competition

Olivier and Mann – The Kingdom of Saudi Arabia’s (KSA) is not concerned about the rise of the U.S. as an oil producing country.

The KSA’s Energy Minister Khalid al-Falih doesn’t believe that the U.S. shale industry is going to swamp the oil industry.

The energy minister’s statement indicates a big change of energy policy in the KSA.

In 2014, the KSA swamped the market with oil in its attempts to control and force other oil producers out of the business.

Saudi’s actions in 2014 caused prices to sharply drop and seriously affected the Kingdom’s bank balance. It also forced the U.S. shale industry to halt and regroup.

Just recently, OPEC and other non-cartel members reversed their position and started cutting back on oil overproduction.

Oil producers now project a supply shortfall by the end of December 2019 and more investment in exploration, as well as increased shale production, are seen as two of the mitigators for this.

The U.S. shale industry is now healthier and more competitive after oil prices went down due to the glut in production. More equipment is being deployed to work as the industry experiences phenomenal improvements and the U.S. shale industry may very well affect oil prices.

Donald Trump threatened to stop oil imports from the KSA and other Middle East countries should they continue to fail to engage ISIS, or compensate America for its involvement in the battle.

Businesses are also concerned with the effects of the potential Trump tariff and border tax on oil products.

The KSA say that increasing cost of crude being shipped to America by tariffs would hurt the U.S.’s competitiveness as it would also increase the costs for consumers and drive up the cost of refined fuel products like gas, diesel, and petrol.

KSA remains confident that Trump will do what is right.