Can Shale Save Oil Prices From Rising More?
The price of a barrel of crude recently reached $81, up from $72 in mid-January. This may be because the IEA said supply would be tight throughout the year, leading traders to push up prices. Supply, however, may save the world from a further surge in crude prices. Much of this is due to shale production in the US.
Bigger Oil Companies –M&A Surges Near Records
Crude News –More Oil Spills
The IEA warning about demand is not the only reason crude prices have jumped. Part of the cause is geopolitical. There are ongoing fears that Russia’s invasion of Ukraine will play a part. Drones from Ukraine have started to hit Russian oil facilities. The Israel-Hamas war has caused fear of a widening war in the Middle East. The attacks by Houthi rebels on Red Sea ships have slowed oil tanker traffic through the Suez Canal.
Shale Drilling Rises
Bloomberg points out that shale production has started to rise, perhaps because oil prices have made this production more profitable. “Shale explorers are heating up again, boosting oil drilling activity to the highest level in half a year amid rising crude prices.” There was a similar bump last year.
In December, the US produced more crude in a month than any nation in history. America has become the crude 600-pound gorilla. Larger amounts of shale production could allow the US to break its own record, bringing global crude prices down.
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