Saudi Arabia’s energy minister has no quarrels with U.S. shale and even sees output cuts by OPEC and its allies as directly aiding American drillers, Bloomberg reports

“The action we have taken, quickly in December and that we’re seeing implemented as we speak is a lifeline to U.S. shale producers,” Khalid Al-Falih said at a conference in Abu Dhabi.

The Organization of Petroleum Exporting Countries, led by Saudi Arabia, agreed to cut oil output this year to support prices.

The group and its allies, known collectively as OPEC+, said they would start to trim 1.2 mmbpd productions this month to stabilize the market. They already reduced output by 600,000 bpd in December, Al-Falih said last week.

Crude producers in the U.S. are pumping a record 11.7 mmbpd, according to the Energy Information Administration. Shale explorers need almost $54/bbl for their oil to eke out a profit because of rising costs for equipment, crews and raw materials needed to extract crude, according to JPMorgan Chase & Co. With oil prices rising, thanks in part to the Saudi-led cuts, that break-even level is in sight.

“Many operators in the U.S. shale patch “call me when they see the price band drop down and they see investors starting to turn away, and they say it’s time to do something,” Al-Falih said. “They want us to do all of the work and they want to take the benefit, but that’s, you know, that’s life.”

Prices are up more than 20 per cent since hitting an almost two-year low in December. Although higher oil is a boon to U.S. shale producers, Al-Falih said he isn’t convinced that the frackers will “sustainably suppress the market.” Output in the U.S. helps tame prices and reduce volatility, which is one of the ultimate aims of the OPEC+ initiative, he said.

U.A.E. Energy Minister Suhail Al Mazrouei sees a risk that shale drillers may overproduce again, and any excess supply from shale deposits could take a long time to clear, he said at the conference. OPEC+ cuts of 1.2 MMbpd are enough, Mazrouei said.