ISTANBUL – If oil prices remain at or above $100 per barrel, it could unleash up to 2.2 million barrels per day (bpd) of US oil, driven by rising demand and continued supply tightness, according to a Rystad Energy analysis.
Tight oil output in the core producing regions of the US, including the Permian, Eagle Ford, Niobrara, Bakken and Anadarko, reached around 7.7 million bpd in the fourth quarter of last year, the agency said, adding this level is still short of the pre-pandemic levels.
According to the analysis released on Monday, production in these regions is expected to surpass the 2019 high of 8.1 million bpd by the second quarter of this year and expand further if a supercycle materializes.
High oil prices are encouraging operators to increase production as supply from sources outside the US remains tight.
Concerns over the impact of coronavirus disease 2019 (Covid-19) globally are fading and countries are removing or relaxing restrictions, resulting in a surge in demand for oil that the current supply would struggle to meet.
Geopolitical uncertainties in major exporting countries are also worsening, threatening to disrupt trade flows in an already constrained environment.
They also predicted that total output will keep climbing and reach an all-time high of more than 16 million boepd by the end of March this year.
Rystad Energy further predicted that a price range between $70 and $100 per barrel would lead to a significant upsurge in output in the fourth quarter of 2022, while a prolonged run of $90-$100 per barrel would result in a further increase to the already recovering rig activity from the second quarter of 2022.
Looking beyond 2023, the agency said $100 West Texas Intermediate (WTI) would allow the industry to grow at a rate of about 960,000 bpd per year from the fourth quarter of 2021 to the fourth quarter of 2025.
In a $70 scenario, supply from the lower 48 states is expected to trend towards 12 million bpd by late-2025, the agency said, adding that a sustained $100 environment would allow US onshore oil volumes to grow to 13.5 million bpd over the next four years. (Anadolu)
