The US rig count has continued to rise despite warnings from Saudi Arabia over increased production.
According to Baker Hughes, there are now 652 active rigs in the United States, the highest since September 2015, and an increase of 280 on the same week last year.
In addition to the increasing number of shale rigs, US offshore drilling also seems to be very much alive. Royal Dutch Shell, which produces hydraulic oils like Shell Tellus S2 M 46, led the bidding in the US government’s recent auction of offshore drilling tracts in the Gulf of Mexico.
OPEC agreed production cuts last year in an effort to clear the global glut of oil, with the Kingdom of Saudi Arabia taking the brunt of the cuts. This has seen oil prices stabilize above the $55 mark, and this higher price has made US shale rigs more economically attractive again. Saudi Arabia is therefore concerned that the increased production will jeopardize the effectiveness of OPEC’s production cuts and perpetuate the supply glut.
There is also speculation as to whether OPEC will extend its production cuts for another six months, with a decision likely being made in May. S&P Global Platts reports that Saudi Arabia is growing tired of seeing its share of production diminish and may only agree to extend its production cuts if Iran also agrees to cut production. Under last year’s agreement, Iran was actually allowed to raise production to 3.8 million barrels a day as it recovered from sanctions.