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the united arab emirates has declared won’t join Saudi Arabia has voluntarily cut oil production, claiming that the Saudi production cuts are enough to balance the market. This is not surprising considering the UAE has argued in the past that it should be allowed to produce more oil than the current OPEC quota. The UAE plans to increase its crude oil production capacity to 5 million barrels per day by 2027, well above OPEC’s 3 mb/d quota.
A week ago, Saudi Arabia extended its voluntary 1 million bpd cut in oil production for another month, this time into August, for the second month in a row. The reduction would bring the country’s production down to about 9 million bpd, the lowest level in several years.The kingdom has been single-handedly sacrificing volumes to boost weak oil prices, but so far little gaindue to increased supply from non-OPEC producers, including the United States.
The U.S. Energy Information Administration reported that U.S. crude oil production is on track to hit a record high this year, up 9% from a year earlier as of April. The EIA expects total U.S. production to reach 12.61 million bpd this year, topping the record of 12.32 million bpd set in 2019 and easily surpassing last year’s 11.89 million bpd. While OPEC and its allies have announced cuts of about 6% of output in 2022, Rystad Energy estimates that output from countries outside OPEC will make up about two-thirds of those cuts, setting back OPEC’s efforts to boost prices.
Improved efficiency and newer technology have made U.S. oil companies more profitable even with lower crude prices, and JPMorgan estimates that drilling and fracking costs for U.S. shale oil have fallen by 36 percent since 2014. %. Exxon Mobil Corporation (NYSE: XOM ) is bet now Shale producers could double the crude oil output from existing wells by employing a new hydraulic fracturing technique.
“There’s just so much oil left in the ground. Fracking has been around for a long time, but it’s not well understood. “ ExxonMobil CEO Darren Woods said at the Bernstein Strategic Decisions Conference on Thursday. ExxonMobil is currently working in two specific areas to improve hydraulic fracturing, Woods said. First, the company is trying to perform more precise fracturing along the well in order to expel more oil-soaked rock. It’s also looking at ways to keep hydraulic fractures open longer to increase oil flow.
By Alex Kimani, Oilprice.com
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