U.S. SHALE SHARE
WSJ - A former Russian energy minister on Friday dismissed concerns U.S. shale oil companies may try to use production cuts by Russia and nations in the Middle East to swoop in and steal market share, saying the Americans know there are some no-go zones.
Igor Yusufov, Russia's energy minister from 2001 to 2004, said U.S. shale producers wouldn't attempt to enter core OPEC and Russia markets where prices are too low for them to compete. "The fact is that shale oil and gas are doing well in markets that start from a certain price," he said in an email exchange with The Wall Street Journal.
The Organization of the Petroleum Exporting Countries, or OPEC, along with Russia and other non-OPEC producers, agreed late last year to reduce their oil production levels in an effort to cut excess crude oil supplies and boost global prices. The imbalance between supply and prices jolted markets in late 2014, sending prices plunging before stabilizing recently at around $53 a barrel, about half their 2013 levels.
Some market observers worry that even if production levels are being reduced as promised by OPEC and Russia, free-market producers from the U.S. and Canada could seek to fill the gap, rendering useless the deal's aim of reducing overall supply. As evidence, they point to U.S. data that show a recent surge in oil and gas rig activity in places like Texas and Oklahoma, and U.S. production figures that reached nine million barrels a day last week, half a million barrels a day more than just three months ago.
Mr. Yusufov, who was also a top official at state-controlled oil company Rosneft and who now heads Moscow-based investment company Fund Energy, said the global market can handle rising U.S. oil production.
"The global demand for fuel will grow due to economic progress in Asia and partially in Europe," he said. "In my opinion there will be a place for all oil and gas producers in the market."
Mr. Yusufov said investors will have to wait and see if the promised cuts by OPEC, Russia and others are realized, but he said he is optimistic. "Agreements of this kind are not binding for their participants, they merely indicate the readiness and the will of producers to stabilize the market," he said. "And we see this will happen."
As energy minister in 2001, Mr. Yusufov said he worked for a similar agreement with OPEC at a meeting in Vienna in which Russia agreed to cut output by 140,000 barrels a day. "In 2001, the goal was achieved: The oil prices stabilized in the desired $20-$25 corridor we saw then as justified pricing." The current plan calls for Russia to cut output by 300,000 barrels a day.
Mr. Yusufov, 60 years old, expressed support for U.S. President Donald Trump's nominee for secretary of state, former Exxon Chief Executive Rex Tillerson, who he said he has known since 2002 when the two worked together on oil projects in Russia.
The former minister said he would like to see some type of Russian-U.S. energy summit, perhaps involving Mr. Tillerson, that could promote U.S. oil investment in Russia. The U.S. leveled sanctions on Russia following Moscow's annexation of the Black Sea peninsula of Crimea in 2014 and its backing of separatists in eastern Ukraine.
Pointing to what he called record spending by the Chinese and others last year in Russia's energy sector, Mr. Yusufov said he hopes this "massive investment into Russian oil and gas sector without participation of American companies would make decision makers both in Moscow and Washington analyze the present situation."
Mr. Trump may speak by phone Saturday with Russian President Vladimir Putin, according to Russian news agencies. It would mark their first conversation since Mr. Trump took office a week ago.
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IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.