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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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U.S. Official Calls For Higher Global Oil Production

  • Speaking on the sidelines of CERA Week, a State Department official said that the United States wants an increase in global oil production.
  • While oil prices have fallen significantly in recent months, prices remain higher than they were before the pandemic.
  • The biggest problem for global oil markets appears to be a lack of spare capacity, and the U.S. is also struggling with very low strategic reserves.
Oil Production

The United States wants to see the world producing more crude oil, including OPEC members. This is what a State Department official said on the sidelines of CERAWeek, noting that the global economy is recovering and more supply is necessary to meet demand.

"As world economies recover, we'll see more consumption. And therefore we'd like to see supply meet demand," Jose Fernandez, Undersecretary of State for Economic Affairs, Energy and the Environment, said, as quoted by the AFP.

He then went on to add that this included output from OPEC+, which last year agreed to slash production by around 1 million bpd and has signaled it has no immediate plans to reconsider that agreement.

The AFP report notes that although oil prices have retreated from highs reached last year in the first months after Russia’s invasion of Ukraine, they are still quite a bit higher than they were before the pandemic.

The Biden administration released close to 200 million barrels from the strategic petroleum reserve to counter the price rally, which caused a spike in retail fuel prices - a move that prompted various reactions from experts.

Now, the SPR is at 40-year lows and needs to be replenished but prices are too high for the U.S. federal government. The bigger and more global problem, however, is spare production capacity.

This capacity was among the issues that U.S. energy executives and OPEC delegates discussed on the first day of CERAWeek. According to a Reuters report quoting one attendee, both executives and OPEC officials were concerned about spare oil production capacity and its sufficiency to meet growing oil demand.

Some analysts have forecast that the global oil market will swing into a deficit in the second half of the year, driven by China’s recovery, which will push global demand higher while supply lags behind.

By Charles Kennedy for Oilprice.com

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  • Osvaldo Valdez on March 07 2023 said:
    The cost and. challenges to increase production of crude oil prevent the oil companies to drill unless there is warranty of demand. According to the majors the easy oil is over and the challenges to explore and produce are more difficult geographically and geologically. Exploration and production is in some cases in politically unstable countries maybe in Africa or South America and have anticollonialsm tendecies. Since the mid 2020s oil production has been less than oil consumption, world consumption increased by 2bn b/d to 102bnb/d per IEA.

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