The US Increased Shale Oil Production Amid OPEC+ Production Cuts
The US exceeded the forecast for production in the current quarter by 800 thousand barrels. per day, the volume amounted to 13.3 million barrels. At the same time, OPEC+ countries are cutting production – Russia has been reducing it by 500 thousand barrels since March. per day.
The United States increased shale oil production compared to last year’s forecasts amid a decline in production by OPEC+ countries, Bloomberg reports.
US government analysts predicted that domestic production would average 12.5 million barrels in the current quarter. per day, but it amounted to 13.3 million barrels. per day. In general, this year the level of production exceeded the forecast, as follows from the infographics presented in the material. The agency noted that the increase in production is “surprising” because the number of drilling rigs has dropped by 20% this year. Bloomberg cites ongoing innovation as the reason for productivity growth.
“The US clearly played a huge role in the global market in 2023, including putting pressure on OPEC+ to cut production,” Ryan Duman, an analyst at consultancy Wood Mackenzie, told the agency.
“Rising U.S. shale oil production and recovery in Iran and Venezuela could effectively offset any additional proposed [OPEC+] cuts in the first quarter [of 2024],” Bloomberg Intelligence analysts Fernando Valle and Salih Yilmaz said.
The agency recalls that OPEC, with the support of Russia, tried to resist the American “shale boom.” In 2014, this led to a significant drop in oil prices, which greatly affected the US shale industry and “ended years of breakneck production growth.” Then there was a recovery, but the pandemic dealt a new blow. According to Bloomberg, after this, US oil producers focused on returning cash to investors rather than increasing production.
Back in June, OPEC+ countries set an oil production quota of 40.46 million barrels. per day from 2024. At their November meetings, group members reaffirmed the June agreement and also agreed to cut production and exports. Such agreements make it possible to achieve stability in prices, which have been trending downward since September (Brent on September 27 cost about $107 per barrel, and on December 15 – $77).
For Russia, a quota of 9.8 million barrels was set for next year. per day. During 2023, the country voluntarily reduced both exports and production. Since March of this year, oil production volumes have been reduced by 500 thousand barrels. per day, since September exports have been reduced by 300 thousand barrels. per day, in December an increase in this volume is allowed.
