The production quantity of oil output and gas in the US has continued to rise. This is so as companies continue to pump more oil and gas in the face of decrease in the rigs employed.
As at August 2023 crude oil and gas production rose to 13.1 million barrels daily. There is an increase of 0.1 million b/d as against the production quantity in November 2019.
A total of 10.8 million b/d was recorded in other lower 48 states aside Mexico. This was disclosed in a report released by the U.S. Energy Information Administration (“Petroleum supply monthly”, EIA, October 31).
The US oil output in these 48 states rose by 10% to the tune of 955,000 b/d as against the output realized in 2022. There has been consistent increase in production even though prices retreated at some point due to the aftermath of Russia’s invasion of Ukraine.
In June 2023 US crude was priced at $71 per barrel at an average market. Also the number of drillings have reduced from 623 in December 2022 to 501 in October 2023. Even though production has continued to increase.
The World Bank has warned that oil prices could soar to a record high of more than $150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East witnessed 50 years ago.
As recent rise in oil and gas prices has been fuelled by fears that exports from energy rich regions could be disrupted due to the war, to date oil and gas flows from the Middle East have remained relatively unscathed despite the Israeli-Palestinian conflict.
The conflict has led to a surge in crude oil prices, with Brent crude and US West Texas Intermediate crude witnessing significant hikes. If the conflict spreads to other oil-producing nations in the region, especially Iran, the global economy could face severe repercussions.
The Bank said that the shock to the global economy would not be confined to energy costs but would also result in hundreds of millions going hungry as a result of higher food prices.
The Bank sketched out three alternative paths for oil prices: a ‘small disruption’ scenario, with the price from $93-$102 a barrel; a ‘medium disruption’ with prices at $109 to $121; and a ‘large disruption’ pushing to $140-$157 a barrel.
Market observers expect that the US may soon toughen its sanctions on exports of oil from Iran, a major player in the commodity, due to Tehran’s close links to Hamas and Hezbollah.
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