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Highlights
- The Permian Basin is expected to boost crude oil production by 70,000bpd in April.
- With energy demands rising after a solid recovery in worldwide COVID-19 cases and limited supplies, the world is going through an acute fuel shortage.
- The number of rigs also soared in the US for the week ending 11 March 2022.
A huge spurt in drilling activity in the Permian Basin in Texas and New Mexico is expected to significantly boost the crude oil production, as per a report by the US Energy Information Administration (EIA).
The EIA productivity report states that Permian, which is the biggest US shale oil basin, is likely to increase its oil production by 70,000 barrels per day(bpd) to record an output of 5.208 million bpd in April 2022.
Additionally, the report also states that the total output of the major US shale oil basins in the coming month will increase to the highest level since March 2020. As per the agency’s estimates, that figure is likely to come in at 8.708 million bpd – representing a gain of 117,000bpd.
Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars
Global energy supply crisis
Currently, the world is feeling the heat of crude oil supply shortages as many countries across the globe, including Australia, have shaken hands with the US and the UK for banning the import of Russian oil and oil products. The ban on Russian oil comes in the wake of Moscow continuing to shell Ukrainian cities.
With energy demands on the rise after a solid recovery in worldwide COVID-19 cases and limited supplies, the world is going through an acute fuel shortage.
To deal with the oil shortages, countries have swung into action. The US and 30 other member countries have together agreed to release an initial 60 million barrels of oil from strategic reserves to stabilise global energy market disruptions. The big decision was taken after a meeting among International Energy Agency (IEA) member countries.
Also Read: Crude oil slides from multi-year highs as Iran talks rev up
US rig count shoots up
The number of rigs in the US soared by 13 units to hit 663 for the week ending on 11 March 2022, as per the data released by Baker Hughes Co. This data helps energy service providers to understand the overall business environment of the oil and gas industry.
Source: © Lancemichaels | Megapixl.com
The Permian basin’s rig count has increased to a total of 316 rigs, significantly up from the previous year's count of 212.
The substantial increase in the rig count in the Permian Basin coupled with the US’ plans to enhance crude oil production is expected to bridge the supply-demand gap to a certain level. Furthermore, an increase in hopes for a diplomatic end to the Russia-Ukraine tussle would further ease the supply concerns and cool down boiling oil prices.
To know about how commodities performed in the last week, click here.
Bottom Line
The significant rise in the US rig count and projected boost in Permian Basin's overall production is expected to bridge the global crude oil demand and supply gap, which in turn might help cool off the boiling oil prices.
