US Crude Oil Production Soars to Record Heights, Defying the Odds

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US Crude Oil Production Soars to Record Heights, Defying the Odds
Credit: © Reuters.

Record U.S. Crude Oil Production: According to government data, U.S. crude oil production has reached a record high of 13.2 million barrels per day. This level surpasses the previous peak set in 2020 before the onset of the COVID-19 pandemic, which significantly impacted global oil demand.

Slow Recovery Over the Last Three Years: U.S. oil production has been recovering gradually over the past three years. During this period, many oil producers prioritized returning cash to shareholders through dividends and buybacks rather than increasing production.

Global Supply Cuts and OPEC+ Curbs: The record U.S. oil production coincides with voluntary supply cuts by Saudi Arabia and Russia, which are extended above the OPEC+ curbs of 1.3 million barrels per day until the end of the year. This demonstrates a global context of managing oil supply.

Recovery Since March 2020: Oil production in the U.S. hit its peak in March 2020 at 13.1 million barrels per day. After that, output dropped significantly to as low as 9.7 million barrels per day as producers adjusted to the sharp decline in demand caused by the pandemic and lockdowns.

Challenges and Disruptions: The oil industry has faced challenges such as labor shortages and higher inflation, along with disruptions caused by events like Russia's invasion of Ukraine. These events have reshaped crude flows in the global market.

Government Actions: U.S. President Joe Biden authorized record withdrawals from the nation's Strategic Petroleum Reserve (SPR) to address rising oil prices. The SPR reached its lowest level since 1983 at 346.8 million barrels in July but has since gradually increased, totaling 351.3 million barrels.

Regional Variations: Some regions of the U.S. have experienced quicker recovery in oil production. Notably, the Permian Basin in Texas and New Mexico, the largest U.S. oilfield, achieved a record output of 5.83 million barrels per day in June.

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