OPEC’s one-time nemesis — US shale — is rearing its head just months after the sector was all but written off as a threat to the cartel’s sway over worldwide oil markets.
Drillers from the Permian Basin in West Texas to the Bakken Shale of North Dakota have ramped up oil production well beyond what analysts foresaw, pushing output to a record just as OPEC and its allies put the brakes on supplies in a bid to arrest price declines.
This time last year, US government forecasters predicted domestic production would average 12.5 million barrels a day during the current quarter. In recent days, that estimate was bumped to 13.3 million; the difference is equivalent to adding a new Venezuela to global supplies.
That growth is reverberating around the world, calling into question the OPEC+ group’s strategy of curbing supplies to prevent the potentially catastrophic price impacts of a glut. It also makes clear that the legions of companies that pump oil from US shale fields still wield enough power to bedevil the cartel’s efforts.
“The US clearly played a huge role in the global market in 2023, including pressuring OPEC+ to curtail their output,” Wood Mackenzie Ltd. analyst Ryan Duman said during an interview.
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