Crude oil production in the United States could increase by close to 1 million bpd next year, according to IHS Markit’s Daniel Yergin.
Speaking to CNBC this week, Yergin said that “The U.S. is back. For the last year, year and a half, it’s been OPEC+ running the show, but U.S. production is coming back already, and it’s going to come back more in 2022.”
U.S. producers slashed their output dramatically during the pandemic, from a record-high 13 million bpd in early 2020, to 11 million bpd in December 2020. Currently, production is around 11.8 million bpd, according to the Energy Information Administration.
Yergin also told CNBC that he had participated in two calls by the U.S. Energy Secretary Jennifer Granholm with the oil industry, asking companies to boost production.
For now, the industry has not welcomed these calls warmly. In fact, some industry insiders have openly expressed their frustration with the Biden administration’s approach to boosting oil production.
“Their first response was to call Opec and ask them to pump more oil. They have not called me,” Scott Sheffield, the chief executive of Pioneer Natural Resources, told the Financial Times on the sidelines of the World Petroleum Congress in Houston earlier this month. “And we’re the largest Permian producer.”
“I think first you, you stay home, you ask your friends, and you ask your neighbors to do it. And then if we can’t do it, you call some other countries,” Occidental’s CEO Vicki Hollub told CNBC last month.
Now that the administration has indeed called on the industry to ramp up production, it may be too late as the top priority of U.S. oil producers remains boosting shareholder returns after years of burning cash. Yet if prices stabilize around current levels, and according to Yergin they will, there could be greater motivation to expand production.
According to the expert, oil prices next year will average between $65 and $85 per barrel, “unless some big geopolitical turmoil happens.”
By Irina Slav for Oilprice.com
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