A surge in United States crude gains made oil exports change the face of the global market and how oil is priced. This is with the price of U.S. crude gaining weight against other benchmarks.

This is what traders and analysts have observed this year. Now, as Europe became a major destination for U.S. oil as it sought to replace sanctioned Russian barrels. But Asia has been receiving more U.S. oil, too, because of its competitive pricing, Reuters reported, citing trade industry insiders.

Earlier this year, in February, the number of oil swaps linked to oil produced in Texas hit a record. As of early 2023, the number of such swaps in total also sat at a record. It has likely increased further since.

These developments were made possible by the shale revolution that turned the United States into the world’s biggest oil producer and a major exporter, especially since last year when the European Union embargoed Russian crude oil and fuels. And because U.S. crude is so competitive, it is probably going to gain further ground on international markets.

“As Midland becomes more and more important in the dated Brent assessment, it has a knock-on effect on other grades having to price themselves lower to compete with WTI Midland,” Reuters quoted Vortexa market analyst Rohit Rathod as saying.

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Source: Oil Price

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Oil prices were steady on Friday but on track for a fifth straight week of gains. This is with investors optimistic healthy demand and supply cuts will keep prices buoyant.

Risk appetite in wider financial markets has been fuelled by growing expectations. The expectation is that central banks are nearing the end of policy tightening campaigns. What banks? The Fed and European Central Bank. It is boosting the outlook for global growth and energy demand.

Both oil benchmarks are on track for a 3.6% weekly increase – a fifth straight week of gains. This is bolstered by supply cuts from the OPEC+ alliance announced earlier this month.

By 1229 GMT, Brent crude slipped 9 cents to $84.15 a barrel, while U.S. West Texas Intermediate (WTI) crude dipped 3 cents to $80.06 a barrel.

Bullish demand expectations were boosted on Thursday after U.S. second-quarter gross domestic product grew at a forecast-beating 2.4%, supporting Federal Reserve Chairman Jerome Powell’s view that the economy can achieve a so-called “soft landing.”

Investors are warming up to the idea of peak rates getting ever closer, while it is looking increasingly probable that the United States will avoid recession, said PVM analyst Tamas Varga.

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Source: Oil & Gas 360

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Experts’ oil price expectations are that it could rise to $100 per barrel by the fourth quarter.

The price per barrel currently sits at $74.

The demand for oil is high right now and more production is needed to meet it. This is according to Judy Stark, the president of Panhandle Producers and Royalty Owners Association.

“There’s a lot of factors involved in that and the majority of it is what’s taking place in the world,” Stark said.

The $100 prediction is based on a variety of factors. Stark says global events, like China’s reopening after COVID and the war in Ukraine affect the price, as well as a global reduction in production and the Biden administration’s deterrence in production.

Mostly, it comes down to supply and demand, said Michael Lozano, government affairs and communications at the Permian Basin Petroleum Association.

“[It’s] not terribly surprising. We’ve seen declining inventories of crude in production in other places around the world,” Lozano said. “And [when] we have higher demand and less supply of anything, you’re gonna see prices rise.”

The price increase has benefits and costs. More production could mean more jobs in the Permian Basin. Since oil is a product of gas production, prices at the pump could rise.

“For as much as operators produce oil and gas in the Permian Basin, we’re also customers of the product we produce as well,” Lozano said. “So this does create some of those challenges when it comes to price.”

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As oil and gas production companies look for efficient and cost-effective methods of increasing their output. With that, the well-intervention market is set to get a healthy boost. Spending on interventions is a way to extract additional resources from an existing well. This is instead of drilling a new one. The projection is for it to jump by almost 20% this year and total $58 billion. Rystad Energy’s modeling shows this is just the start of a surge in the coming years. It is as the focus on efficiency intensifies.

The intervention rate

How many oil and gas wells go through the intervention process? The forecast is that it will reach 17% in 2027. This would total about 260,000 wells globally.

More than $11 billion of the total expenditure will be directed to the wireline & perforating segment. Intervention units and oilfield chemicals sectors will represent 35%. In addition, the sum of the investments in coiled tubing, water management, and intervention tools is expected to close in 2023 surpassing $20 billion.

To boost production rather than drill new wells, operators are more likely to undertake intervention into mature assets that have been producing for more than five years, with relatively high production rates which are starting to show signs of decline. Onshore interventions in Asia, South America, and Africa will lead the 9% growth in activities related to intervention during 2024, a year expected to be significant for the good intervention market. North America is projected to account for 64% of the total oil and gas wells ready for intervention in 2027, whereas Asia and South America will reach their maximum in 2026, with respectively 41,413 and 9,703 wells.

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Source: Markets Insider

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Oil and gas companies are reinvesting record profits from the fossil fuel price surge driven by the Ukraine war to intensify the hunt for new deposits despite repeated calls by the United Nations to phase out hydrocarbons to avoid a climate crisis. What will these oil giants do?

Data and industry executives found the exploration revival responds to pressure from a majority of investors to maximize their oil and gas profits rather than invest in lower-margin renewable energy businesses.

The International Energy Agency forecasts global upstream oil and gas investments to increase by about 11 percent to $528bn in 2023, the highest level since 2015.

Barclays said it expected the number of offshore projects to get approval this year to reach a 10-year high.

The renewed appetite for oil and gas reserves and production – among European majors in particular – comes after Shell and BP slowed down plans to shift away from their legacy business and invest in renewables as part of the energy transition.

Upstream oil and gas have historically had returns of 15 to 20 percent while most renewables projects have delivered up to 8 percent.

An analysis of data from oil services firm Baker Hughes showed the number of offshore drilling vessels used to explore and produce oil and gas recovered in May to pre-pandemic levels, rising by 45 percent from October 2020 lows.

Wood Mackenzie analysts predicted a continued increase in activity, forecasting offshore exploration and drilling activity to grow by 20 percent by 2025.

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Source: ALJAZEERA

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