22 FEBRUARY 2024
The past year has seen major changes unfold in oil markets, especially on the supply-side. With the OPEC/Russia alliance opting to extend production cuts until March 2024, the US has emerged as the world’s largest supplier, thanks to its booming shale industry.
In late December, US daily oil supply reached a record 13.2 million barrels, comfortably surpassing the next two largest producers; Saudi Arabia (12 mbpd) and Russia (11mbpd). This is helping to keep a lid on the oil price, despite the escalating tensions in the Middle East.
The US Strategic Petroleum Reserve (SPR) should be another beneficiary. In an effort to quell domestic inflation, the Biden Administration drained the reserve by almost 50% from its 2020 peak, leaving the stockpile housing just 350 million barrels by mid-2023.
Replenishing the SPR has since become a priority and the surge in US oil production will ultimately help to achieve this, but progress has been slow so far; only 10 million barrels have been added since that July low.
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