According to new estimates from the US Energy Information Administration (EIA), the global production of crude oil is now back to within 1% of the level seen just before the COVID-19 pandemic.
The EIA estimates that global production of liquid fuels averaged 99.5 million barrels per day in May this year, just shy of the figure in March 2020. Nevertheless, it expects the considerable geopolitical uncertainty and low crude inventories to keep the oil price relatively high.
In the US – where companies like ExxonMobil, the energy company behind the Mobil industrial lubricant range, have been ramping up production in the Permian Basin – the EIA estimates that production of liquid fuels is within 3% of its January 2020 record high. It also believes that production in OPEC countries is already back to pre-pandemic levels. On top of this, OPEC has announced larger-than-expected production increases for July and August, which should take its total production to the highest since the second quarter of 2019.
The EIA also made some price forecasts, albeit with some caveats:
“Current oil inventory levels are low, which amplifies the potential for oil price volatility. Actual price outcomes will largely depend on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market.”
The organisation currently expects Brent Crude spot prices to average $108 per barrel in the latter half of this year, before dropping to $97 per barrel next year.
