Analysts had previously feared that tensions in the Middle East would send the price of black gold back to highs, but US shale oil companies are increasing production and this is helping to keep oil prices in check.
Houthi rebels operating in Yemen have recently launched attacks against merchant ships. Several shipping companies then announced that they would no longer use the Red Sea to transport oil. Oil prices subsequently began to rise, but thanks to US shale oil companies the rise was short-lived, the Wall Street Journal reported.
Brent crude, the international energy benchmark, is once again below $80 a barrel. On Monday morning the price of Brent was $77 a barrel. The price of WTI oil traded in the United States is $71.65 per barrel.
The US will also increase exports of liquefied natural gas, according to data firm Kpler. European countries are now less dependent on fossil fuel supplies that pass through the Suez Canal.
However, US shale oil producers have gained a lot of momentum. Analysts previously expected the U.S. would not significantly increase oil production in 2023. Shale oil companies had previously planned to buy back shares and reduce their debt load.
However, demand for oil remains and US companies want to take advantage of the situation. Guyana and Brazil are also increasing production. This has helped keep global oil prices in check.
The actions of shale oil companies are undermining OPEC’s efforts to raise the price of oil. OPEC+ countries recently agreed to cut oil production by one million barrels a day, but this did not lead to the price rise the cartel was hoping for.
Shale oil companies have previously said their actions can help stabilize the oil market during the crisis.
“When it comes to small supply disruptions, increased US production will help. But there is a problem in the form of Iran that cannot be solved because Iran threatens the Strait of Hormuz, through which they pass 18 million barrels a day,” said Robert McNally, head of consultancy Rapidan Energy.
2024-01-01 07:59:00
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