While OPEC has been presenting an optimistic facade in recent months, repeating at every opportunity that the global oil market is “rebalancing” and demand is rising, the oil production cartel made a rare slip today when it addressed what should not be named in public: US shale production. Speaking on Tuesday, OPEC Secretary General Mohammed Barkindo called on U.S. shale oil producers to help curtail global oil supply, warning extraordinary measures might be needed next year to sustain the rebalanced market in the medium to long term. Which is odd because in every other public address by OPEC members, we hear precisely the opposite: that the market is already in a state of “healthy rebalancing” and… the oil production cut which was supposed to last until this past June may now be extended beyond March of 2018.

“We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” said Barkindo quoted by Reuters during a speech delivered at the India Energy Forum organized by CERAWeek in New Delhi. 

“At the moment we (OPEC and independent U.S. producers) both agreed that we have a shared responsibility in maintaining stability because they are also not insulated from the impact of this downturn,” Barkindo said, referring to a slide in oil prices that spurred OPEC to agree production cuts late last year.

“The call by independents themselves (is) that we need to continue this interaction.”

Some independents… but not all, and certainly not the cash-flush US shale producers.

Which is why it is unclear just how much this “call” by non-shale independents will bother, or even be heard, by shale producers: fundamentally it is all about liquidity and cash flow, and whereas much of OPEC is at or just shy of its all-in breakeven costs (when factoring in government budgets), shale has no problems obtaining funding courtesy of a massive bond bubble, which allows it to keep its balance sheet stocked with cash, even if the cash flow from operations is barely positive. As such, all shale is doing is capturing market share from those OPEC producers who are prohibited from spending more to replenish existing output, something which the overly generous US junk bond market will allow shale to keep doing indefinitely, and at least until there is another sharp drop in oil prices.