ExxonMobil’s boss Rex Tillerson told Saudi Arabia’s Energy Minister Khalid al-Falih on Wednesday that fears of a new global oil supply crunch were exaggerated as the US oil industry was adapting to the low price shock and was set to resume growth.
The remarks by Tillerson, who is due to retire before March next year, about the resilience of the US oil industry come as the Saudis have effectively abandoned their strategy to drive higher cost producers out of the market by ramping up cheap supplies from their own fields.
More than two years of downturn that saw oil prices halve to around US$50 a barrel today after a boom in US shale oil production have led to a sharp decline in investment.
But Tillerson, who heads the world’s largest listed oil and gas company, said that shale oil producers’ resilience in cutting costs to make some wells profitable at as low as US$40 a barrel means that North America has effectively become a swing producer that will be able to respond rapidly to any global supply shortage.
His stance contrasted with that of the Saudi Arabian Energy Minister, who minutes earlier warned the same event that the sector faces challenges due to the drop in investment. (Reuters)
