The leader of the International Energy Agency (IEA) said, U.S. shale oil manufacturers will build their yield if oil costs hit $60 US a barrel, which means OPEC should walk a scarce difference on the off chance that it diminishes production to prop up costs.
OPEC members are about to meet in Vienna toward the end of the month to push through the principal yield restricting arrangement since 2008.
“If this decision pushes the prices up (to) around $60 dollars, we may well see a significant increase from shale oil from the U.S.,” Fatih Birol told Reuters on Wednesday.
He said this level would be sufficient for some U.S. shale companies to restart slowed down production, in spite of the fact that it would take around nine months for the new supply to achieve the market.
Low costs have prompted to two back to back years of falling investments in upstream oil and gas investment, an example Birol hopes to proceed in 2017. This, he said, could prompt to more tightly oil supply and value spikes later on.
“We are entering a period of greater oil price volatility and the companies, organizations and countries should prepare themselves accordingly,” he said.