Shale Is Keeping the World Awash With Oil as Conflicts Abound
A surprise surge in American oil and gas production and exports is helping to keep the world stocked, blunting the impact of widening conflict in the Middle East that has crimped key shipping lanes. When Iranian-backed Houthi militants began launching missiles and drones at ships crossing the Red Sea near Yemen in October, many feared disruption to the vital shipping lane would drive up energy prices. But oil and gas prices this past month have sunk about 5% and 23%, respectively.
That is largely because of record production of U.S. fossil fuels. Shippers in November moved more oil out of the U.S.
than what was produced in Iraq, OPEC’s second-largest member, at a record 4.5 million barrels a day. Likewise, U.S. exports of liquefied natural gas, or LNG, are set to hit a record in December, according to market intelligence firm Kpler.
European countries have snapped up more U.S. cargoes in recent months, becoming less reliant on shipments through the Suez Canal, a key Red Sea artery. The attacks on vessels, which the Houthis say are in retaliation for the Israeli military operation in Gaza, have intensified in recent days.
U.S. officials alleged a Dec. 23 attack drone launched directly from Iran struck a Japanese-owned chemical tanker off the coast of India, though Tehran denied that claim.
The shipping crisis is expected to raise consumer prices for goods that cross the Red Sea, as hundreds of vessels have been forced to reroute around the Cape of Good Hope in South Africa. But it is unfolding just as U.S. frackers have caught a second wind that, so far, has countered inflationary effects in energy.
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