This time is different: outside of OPEC+, oil stalls.
(Bloomberg) — “This time is different” might be the most dangerous word in the business: Billions of dollars are gone, betting that history will never repeat itself, and now, in the oil world, it really seems like this is the case this time. For the first time in decades, oil companies are in no rush to ramp up production in pursuit of skyrocketing oil prices as Brent crude prices approach $70, even in the Permian, the fertile shale basin at the center of the United States. US energy boom The hacker continues to defy the traditional booming spending cycle. The oil industry is facing hurdles, with Wall Street investors pressing firms to spend less. about drilling and reimbursing shareholders more instead. and climate change activist anti-fossil fuel Exxon Mobil Corp. is a trend paradigm. After a humiliating defeat at the hands of a small activist elbow himself on the board. The dramatic industry events last week only added to what was happening as an opportunity for OPEC+ producers, giving the Saudi-led and Russia-led alliance more room for maneuvers to bring back their own production. This is because non-OPEC output has not recovered as quickly as expected or feared by past experience. The alliance will likely continue to increase supply when it meets on June 1. “Crime” shareholders have asked Exxon to penetrate less and Focus on returning investors “They are putting their money into the hole like crazy,” Christopher Ailman, CalSTRS Chief Investment Officer. “We see that company is really heading into the hole. not survive in the future unless they change and adapt And now they have to do it.” Exxon is unlikely to be alone. Royal Dutch Shell Plc lost a major legal battle last week when a Dutch court ordered dramatic emissions cuts by 2030, what it wanted. less oil production Many in the industry fear that lawsuits will be filed elsewhere. With Western oil majors immediately targeting more than the state-owned oil companies that make up most of OPEC production. “We are seeing a shift from stigma to higher investment in oil production,” said Bob McNally, chairman of the Rapidan Energy Group adviser and a former White House official, although non-OPEC+ production is creeping back on the offense. Missed out on 2020 and sharply slumped levels in April and May last year. This is far from a full recovery. Overall, non-OPEC+ output will grow this year by 620,000 barrels per day. That’s less than half of the 1.3 million bpd drop in 2020 supply growth forecasts for the rest of the year. “Nearly close at all” expected increase According to the International Energy Agency, beyond 2021, oil output is likely to increase in many countries. including the United States, Brazil, Canada and the new Guyana oil producer. But production is declining elsewhere. from the UK, Colombia, Malaysia and Argentina. This was because non-OPEC+ production grew less than global demand for oil. Management and traders said. It was a major disruption of the past. When oil companies respond to higher prices by accelerating investment again increase non-OPEC output And it leaves a minister led by Saudi Arabia’s Abdul Aziz bin Salman to strike a much more difficult balance. Lack of growth in oil production outside of OPEC+, not much listed on the market. Ultimately, the coronavirus pandemic continues to limit global oil demand. It may become more apparent later this year and in 2022, when it is. Vaccination campaign against COVID-19 tend to bear fruit and the world will need more oil The expected return of Iran to the market will help some of that. but more likely to be necessary when that happens It will largely depend on OPEC to fill the gap. One sign of how this recovery will be different is the number of US drilling: Gradually increasing, but the recovery has been slower than it has been since the last major oil price crash in 2008-09, Shale Company. Committed to returning more money to shareholders through dividends. Whereas, before the shale boom, 70-90% of the cash flow was reused in further drilling. They are now keeping that indicator at around 50%. The result is US crude oil production. has stabilized at approximately 11 million barrels per day. From July 2020 outside the US and Canada The outlook is even darker: at the end of April. North America’s number of historical oil rigs is 523 lower than last year. And it’s nearly 40 percent lower than it was two years ago, according to Baker Hughes Co. When Saudi Energy Minister Prince Abdulaziz predicted earlier this year, “The ‘drill, honey, drill’ will be gone forever.” It’s a brave call When ministers meet this week They might dare hope he’s right. This story is available at Bloomberg.com Apply now to stay ahead of the most trusted sources of business news © 2021 Bloomberg LP.