How The US Sets Global Oil And Gas Prices
The US is increasingly influential in price formation for crude and global gas markets. But tight oil and shale gas, through LNG exports to Europe, are likely to be cap and collar in their respective markets for the next few years – tight oil setting the ceiling price, US gas the floor.
The big three – Saudi Arabia, Russia and the USA – have jostled for position as the world’s leading oil producer since the start of the new millennium. The astonishing growth path of tight oil propelled the USA to top dog 2015, ousting by a small margin Saudi Arabia, No.1 since the early 1990s. In the background, Russia, like the USA, built production up. Last year, all three produced 12 million b/d (including NGLs), give or take, and each is currently producing at or close to all-time-record levels.
The competitive sparring of the last few years is about to end, and in this fight there will be only one winner. Our latest Macro Oils Long Term Outlook shows the extent to which the USA outpaces the rest in the near future. We forecast that by 2025, US liquids volumes will increase by over 50% to 19 million b/d; Saudi Arabia will be broadly flat, whereas Russia faces gentle decline…