Page 102 - RusRPTOct23

soaring 10% in the past month to over $90 a barrel.
First, shale output is already growing at a decent clip, adding 700,000 barrels a day so far this year, according to the Energy Information Administration. Supermajors Exxon Mobil Corp., Chevron Corp. and BP Plc are driving much of the increase with annual rates of more than 10%. To grow much faster risks eroding returns.
Second, the bigger US shale gets, the harder it is to grow. Output from wells declines by as much as 60% in the first year, meaning that new ones constantly need to be drilled.
At 13mn barrels a day, America first needs to backfill 4mn barrels a day — equivalent to the production of Iraq, OPEC’s second-largest member — just to keep overall supply flat, according to Raoul LeBlanc, a senior analyst at S&P Global.
Third, independent and private producers, which make up the bulk of Permian output, are increasingly worried about whether they have enough well locations to maintain production. A cautious approach at $90 oil helps them return cash to shareholders while preserving their assets for the future.
The Russian government has restricted gasoline and diesel fuel exports until the domestic market stabilizes, according to a statement released on September 21. "The government has temporarily restricted exports of gasoline and diesel fuel for stabilization of the national market," the government said. A corresponding order was signed by Prime Minister Mikhail Mishustin. According to the statement, the restrictions will cut the prices for consumers. Fuel prices reached and remained near record levels for several months earlier in the year. The Energy Ministry said it submitted a draft order allowing only oil product makers to export the goods. The ministry also said that the restrictions are temporary and aimed at preventing grey exports.
The oil market is facing a substantial supply deficit in the months ahead says IEA in September. The global oil market is set to tighten through the end of the year as China drives record global demand and as Saudi Arabia and Russia extend their output cuts, according to its Oil Market Report for September.
The decision by Saudi Arabia and Russia to reduce production through December will drive a significant supply shortfall in the fourth quarter of this year. This could further push up prices, which breached $90 per barrel in August for the first time in 10 months, adding to the inflationary pressures that are plaguing economies around the world.
The growing strains in the oil market, a risk our monthly report has been
102 RUSSIA Country Report October 2023 www.intellinews.com