LONDON: BP Chief Executive Bob Dudley described the United States’ high-pace shale oil sector as a “market without a brain” that, unlike Saudi Arabia and Russia, only responds to market signals.
The US shale oil sector, which has helped the country to become the world’s biggest oil producer last year, needs oil to sell at between US$40 to US$60 a barrel to make money and moves to stop operating rigs quickly when they become unprofitable.
In its biggest deal in around 20 years, BP bought US assets from BHP for US$10.5 billion last year.
“The US is the only country that completely responds to market signals … like a market without a brain. It just responds to price signals,” Dudley told the International Petroleum Week conference in London.
“Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the US shale market responds purely to oil prices.”
Not least in reaction to surging US output, Russia joined a global supply cut deal with the members of the Organisation of the Petroleum Exporting Countries to prop up prices.
Overall US crude production has climbed to a weekly record of 12 million barrels per day (bpd), the US Energy Information Administration said in its latest report, mainly due to increases in the Permian and the Bakken in North Dakota.
Crude stockpiles have built for a fifth straight week to their highest since Oct 2017 and exports hit an all-time high.