Saudi Prince: Not Trying To Put U.S. Shale Out Of Business

Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman, told Maria Bartiromo that there is no Saudi plot to bankrupt American shale oil.

“I have friends, I have pals, we have good relationships with them. I was in public many times in December saying we like them, we want to prosper with them, and we never engaged in a so-called zero sum game,” bin Salman will be heard saying tomorrow morning on Mornings with Maria on the FOX Business Network.

Saudi Arabia set the oil markets alight on March 6. That’s when Saudi Arabia and Russia disagreed on the continuation of crude oil production cuts. Oil prices tanked and pushed markets lower on March 9 because of it, especially after the Saudi’s said that since Russia had no plans to curtail production, neither would they.

President Trump called Saudi Arabia and Russia to discuss their decision, a decision which put oil markets in a choke hold thanks not only to the OPEC+ failure, but because of demand constraints caused by a global pandemic.

Oil prices continue to fall because of the public health crisis, hitting $20.49 on Tuesday for the nearby WTI futures contract.

Last week, the Saudis, Russians and the U.S. agreed to reduce output in a coordinated manner. Countries around the world agreed to reduce production as well.

“I think the president got it right,” bin Salman said about reducing production in unison. “I’m very grateful for the work that the president did, the secretary of energy did, and to the people around the president…and other partners in Russia,” he says.

On Monday, Russian president Vladimir Putin said they would cut production more than planned as the new SARS coronavirus continues to take its toll on the Russian economy.

Demand for gasoline in Russia fell by as much as 30% in the last week, with expectations for demand to be cut in half this month due to restrictions of movement, Russia’s Energy Ministry said today.

Within the market rumor mill, the Saudis and Russians were tag-teaming against the Americans in hopes to bankrupt the shale industry, something that would just lead to industry consolidation rather than the end of shale oil and gas production in the United States, anyway.

U.S. shale is one of the most expensive to pull out of the ground. Though cost-per-barrel has come down over the last few years, it is more expensive to produce here than it is in OPEC nations and in Russia.

U.S. market share has risen over the last few years in Asia and in Europe due to sanctions on Iran, and lackluster development of oil fields out of Iraq. Not to mention Europe trying to diversify sources away from Russia, and importing American LNG to add to its energy mix.

Bin Salman said he expects oil prices will turn the corner once countries lift quarantine measures.