U.S. oil prices soared Wednesday to their highest level in more than a year. Most frackers plan to stay on the sidelines.
Surging global demand coupled with output cuts by Saudi Arabia and Russia have sent crude prices to levels not seen since last August. The increase is hitting consumers at the pump, vexing policy makers’ fight against inflation and posing new challenges for President Biden ahead of the 2024 election. Though some analysts say oil prices could soon hit $100 a barrel, U.S.
shale companies aren’t rushing to drill more. That means that unlike in past years when frackers flooded the market with crude and alleviated pressure, oil prices might remain elevated until someone else adds production or demand ebbs. In the Permian Basin of New Mexico and West Texas, the most active oil field in the nation, the number of rigs drilling for crude as of last week had declined by about 12% to 314 since the end of April, according to oil field services company Baker Hughes—even as U.S.
oil prices jumped by about $13 a barrel over that same period. Some oil executives said most of the shale industry plans to stand pat even as global oil prices increase further. Most shale companies have vowed to hand over their winnings from high energy prices to investors via share buybacks and dividends.
They also face pressure from inflation and high interest rates. “If you think about capital efficiency, and you want to make sure you’re thinking long-term about your business, moving [drilling rigs] up and down a lot is not a good idea," said Jack Williams, a senior vice president at Exxon Mobil. Exxon, one of the largest shale drillers, cut its working U.S.
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