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HomeBusinessUS Oil Production Set to Reach New Highs in 2024, Putting Pressure on Saudi Arabia

US Oil Production Set to Reach New Highs in 2024, Putting Pressure on Saudi Arabia

Increased US oil production and higher capital expenditure budgets from Exxon Mobil and Chevron could result in a record-breaking 13.3 million barrels per day in 2024.

December 22, 2023
in Business
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US oil production is expected to continue its rapid growth and could reach a new high of 13.3 million barrels per day in 2024. This surge in production puts pressure on Saudi Arabia to regain control over crude prices.

Analysts at Rapidan Energy project that US oil output will average 13.3 million barrels per day next year, surpassing the previous record of 13.2 million barrels per day set in September. This increase comes as Exxon Mobil and Chevron have announced plans to boost their capital expenditure budgets for 2024.

The rise in US oil supply coincides with output cuts from OPEC+ nations like Saudi Arabia and Russia, which have struggled to lift oil prices. Some experts speculate that Saudi Arabia may flood the oil market with supply, similar to their strategy in 2014, in order to drive down prices and make US production less profitable. However, Rapidan Energy does not believe OPEC+ will take this approach and expects supply-demand fundamentals to support prices.

The growth in US oil production is undeniable, with Exxon Mobil and Chevron making significant investments and pursuing mergers with top shale producers. The Permian Basin, a key region for shale production, is expected to drive growth in the coming years.

Shifting Priorities

While the increased budgets of Exxon Mobil and Chevron highlight the growth in US oil production, they also reflect a changing landscape in the American energy industry. Oil companies are now prioritizing shareholder returns through buybacks and dividends, rather than reinvesting all their cash into capital expenditures. This shift in focus has led to a decrease in the percentage of cash spent on drilling new oil wells.

Despite the focus on US shale production, OPEC is more concerned about inadequate investment in supply rather than the threat posed by shale growth. OPEC disagrees with the International Energy Agency’s view on peak oil demand and believes shale oil growth is less of a risk in the long term.

Tags: Chevroncrude pricesExxon Mobilsaudi arabiaUS oil production
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