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US should produce more to ease oil market tightness, says OPEC's secretary general

Highlights

Barkindo calls US shale basins 'low-hanging fruit' for more supplies

US shares responsibility to maintain market stability, he says

OPEC+ alliance not yet decided on output policy after August

As the world's largest oil producer, the US bears some shared responsibility for easing the current supply squeeze, OPEC Secretary General Mohammed Barkindo said June 16, suggesting that the Biden Administration could be doing more to raise domestic output.

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"We are glad that their production is inching up, as well as their exports," Barkindo told reporters in London, where he spoke at an energy transition forum. "But the US domestic industry, in our opinion, the shale basins [are] one of the low-hanging fruits that the world can easily tap for additional supplies in the months and years to come."

OPEC and its allies, including Russia, have for months stuck to their schedule of monthly modest production increases, frustrating the US and other consuming countries, who have cajoled and chided the group to pump more crude to bring down rising prices and offset Russian output losses from western sanctions over the invasion of Ukraine.

The G7 group of developed nations, for instance, had in May called on oil and gas producers, including OPEC, to "act in a responsible manner and respond to tightening international markets."

Barkindo noted that on June 2, the OPEC+ alliance finally agreed to more aggressive output hikes for July and August. But fresh off a trip to New York and Washington, where he met with oil companies and investors, the secretary general said he heard several complaints that the industry did not feel sufficiently encouraged to increase production.

"They... brought to my attention that the domestic industry in the US is yet to receive the necessary support to continue to meet its obligations," Barkindo said. "The US today is the biggest producer in the world and is rapidly becoming a leading exporter to world markets. Therefore it goes without saying that the responsibility or the task to maintain sustainable stability in the market is a shared responsibility with all parties, including the US as a global leader in this industry."

The OPEC+ alliance will wait and see how the market evolves over the next two months before deciding what to do beyond August, he added. The next OPEC+ meeting is scheduled for June 30.

"We continue to meet every month," he said. "In OPEC, we go step by step."

Barkindo, who will leave his role at the end of July and be replaced by Kuwait's Haitham al-Ghais, said the current energy crisis highlights the need for more upstream and downstream investment in the oil sector. OPEC itself is facing a dearth of spare capacity beyond Saudi Arabia and the UAE, crimping its ability to respond to rising demand and balance the market on its own.

He blamed environmental rhetoric for making investors shy away from fossil fuels.

"We have not been able to expand this capacity at the level that will meet current and future demand because of a lack of adequate and predictable investment in this industry," he said.