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Growth in US shale presents problems for OPEC+

oil barrels

According to analysts, the ongoing growth in crude oil production in the US could cause problems for the OPEC+ group.

This comes as the group seeks to reintroduce more oil into the market towards the end of this year. Bloomberg reports that analysts on Wall Street do not believe that US shale operators like ExxonMobil, the maker of the Mobil DTE hydraulic oil range, are finished with increasing their production targets, despite many revising them up in recent weeks.

Moreover, the increases would come on top of a surprise increase of a million barrels per day (bpd) last year.

According to analysts surveyed by Bloomberg, Diamondback Energy Inc. is expected to increase its target for the full year to 291,000 bpd, a rise of 5%. What is more, Matador Resources Co. is expected to report a similar lift, after its chief financial officer said that its 2024 target would be updated once it acquires $1.9 billion in Permian Basin assets.

Against this backdrop, the plans by OPEC+ to release an extra half a million bpd of crude oil into the market could weigh on prices at a point when the end of summer usually triggers a decline in demand in the northern hemisphere.

This doesn’t seem to worry shale operators, however, because many need only a price of $40 per barrel or so to make a profit on oil from the Permian. Shale operators are also managing to become ever more efficient at optimising production, thereby reducing breakeven costs.

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