• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 8 days The United States produced more crude oil than any nation, at any time.
  • 1 day e-truck insanity
  • 7 days How Far Have We Really Gotten With Alternative Energy
  • 7 days China deletes leaked stats showing plunging birth rate for 2023
  • 8 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 5 days Bad news for e-cars keeps coming
Oil Drops on Inventory Build

Oil Drops on Inventory Build

Crude oil prices moved lower…

Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

More Info

Premium Content

UAE Will Not Make Voluntary Oil Production Cuts

  • The UAE has announced it will not make any additional voluntary oil production cuts.
  • Saudi Arabia announced it will extend its voluntary 1 million bpd production cut through August.
  • Increasing production from non-OPEC members has frustrated OPEC+ efforts to bolster crude prices. 

The United Arab Emirates has announced that it will not join Saudi Arabia in making voluntary oil production cuts, claiming that the cuts by the Saudis are enough to balance the markets. This is hardly surprising considering that the UAE has in the past argued that it should be allowed to pump more than its current OPEC quota. The UAE has plans to ramp up its crude production capacity to five million barrels per day (bpd) by 2027, well above OPEC’s quota of 3 mb/d.

A week ago, for the second month running, Saudi Arabia extended its voluntary 1M bbl/day oil production cut for another month, this time till August. The reduction will take the country’s production to ~9M bbl/day, the lowest level in several years. The Kingdom has been single-handedly sacrificing sales volume in a bid to goose weak oil prices, but has so far reaped little reward, thanks to increased supply by non-OPEC producers including the United States.

The Energy Information Administration has reported that U.S. crude oil production is on track to set a record this year, up 9% Y/Y through April. EIA has forecast total U.S. output will hit 12.61M bbl/day in the current year, above the previous record of 12.32M bbl/day set in 2019 and easily beating last year's 11.89M bbl/day. Although OPEC and its allies have announced cuts amounting to ~6% of 2022's production, Rystad Energy estimates output in countries outside OPEC is making up for about two-thirds of those reductions, frustrating OPEC’s efforts to goose prices.

Improved efficiency and newer technologies have made U.S. oil companies more profitable, even at lower crude prices, with J.P. Morgan estimating that the cost of drilling and fracking in the U.S. shale has dropped by 36% since 2014. Shale giant ExxonMobil Corp. (NYSE:XOM) is now betting that shale producers can double crude output from their existing wells by employing novel fracking technologies.

There’s just a lot of oil being left in the ground. Fracking’s been around for a really long time, but the science of fracking is not well understood,” Exxon Chief Executive Officer Darren Woods said Thursday at the Bernstein Strategic Decisions conference. Woods has revealed that Exxon is currently working on two specific areas to improve fracking. First off, the company is trying to frack more precisely along the well so that more oil-soaked rock gets drained. It’s also looking for ways to keep the fracked cracks open longer so as to boost the flow of oil. 

By Alex Kimani for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Mamdouh Salameh on July 10 2023 said:
    Rightly so since the global oil market is balanced and global oil demand is robust. Even Saudi Arabia's voluntary cut of 1.0 million barrels a day (mbd) for July and its extension for August and also Russian announcement of an oil export cut of 500,000 barrels a day (b/d) in August weren’t necessary.

    Weakness in oil prices has nothing to do with market fundamentals or China’s economy and virtually everything to do with fears of US banking difficulties triggering a global banking or financial crisis and more hikes by the US Federal bank precipitating a collapse of more US commercial banks to add to the three that have collapsed early in the year.

    The claim by the US Energy Information Administration (EIA) that U.S. crude oil production is on track to set a record this year hitting 12.61 mbd is pure hype if not downright lying. US shale oil is a spent force.

    Moreover, Rystad Energy’s claim that non-OPEC producers are making up for about two-thirds of the OPEC+ cuts is unsubstantiated. The maximum Brazil, Guyana and Norway could add to global supplies this year is estimated at less than 300,000 b/d.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News