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ConocoPhillips CEO Warns Over Strong Oil Production Growth, Shale Rebound

  • The CEO of ConocoPhillips has said market participants should be worried about strong oil production growth coming out of the U.S. in 2022/2023, potentially echoing the supply surges of the past decade.
  • Conoco recently upgraded their 2022 forecast for U.S. oil supply growth, following surprise announcements in recent days by Exxon Mobil Corp. and Chevron Corp. to aggressively ramp up Permian Basin production. They now see output growing by as much as 900,000 barrels a day this year. That’s more than a third higher than the EIA’s forecast.
  • CEO, Ryan Lance, said “If you’re not worried about it, you should be.”
  • Crude prices have rallied around 17% this year as the global economic recovery continues, inventories run low and concern that some OPEC countries are unable to fulfill their quota for increased production.
  • The surge in prices means that U.S. shale, significantly hit throughout 2020, has quickly become incredibly profitable and is on course to generate record cash flows this year.
  • But a rebounding shale sector is a double-edged sword for global oil markets. Too much growth and it could prompt a response from Saudi Arabia and its allies, who have twice engaged in damaging price wars in the past decade after shale grabbed too much market share. (BBG)

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