The US oil business told Sputnik about the market situation after the participants of OPEC and non-OPEC oil producing countries unanimously agreed at a Thursday meeting in Vienna to extend the oil freeze agreement.
WASHINGTON (Sputnik) — US oil production and export will likely rise following the extension of the oil output reduction deal announced recently by 24 countries, US Energy Association Executive Director Barry Worthington told Sputnik.
Participants of Organization of the Petroleum Exporting Countries and non-OPEC oil producing countries unanimously agreed at a Thursday meeting in Vienna to extend the oil freeze agreement until the end of 2018.
“US producers were not very concerned,” Worthington said on Friday. “Likely our domestic production will increase and our exports will increase.”
The United States has not and will not join the oil output reduction deal because the federal government cannot put such restrictions on US businesses.
Worthington explained the US government does not have the authority to restrict oil production in the United States and the market will determine “when, where and at what prices” oil companies will produce.
The energy association chief said he is hopeful the newly-reached agreement will balance overall world oil markets.
However, he added it remains to be seen how markets will react to geopolitical events, which is not always possible to predict.
Meanwhile, CEO of a leading US oil drilling services company Dan Eberhart told Sputnik that thousands of drilled but uncompleted wells in the United States will cap oil price growth expected after OPEC and non-OPEC producers extended an agreement to reduce output.
“Drilled but uncompleted wells (DUCs) will limit how high oil can go,” Canary LLC CEO said on Friday. “The DUCs will add production quickly when there is a sufficient price increase to pay more to complete them.”
“The pendulum of influence has swung in favor of the United States,” Eberhart said.
The United States does not participate in the OPEC and non-OPEC oil freeze deal because the US federal government cannot put such restrictions on American businesses.
Eberhart explained that drilling activity in the United States was up 70 percent in 2017 compared to the previous year, when OPEC first reached an agreement on reducing oil output.
“That trend is being driven by the market’s realization that US shale production and the short cycle domestic producers are now in a position to respond quickly to fluctuations in market dynamics,” Eberhart added.
The total number of drilled but uncompleted wells in the United States has reached 7,342 in November, according to the US Energy Information Administration.
In 2016, the OPEC member states reached an agreement in Vienna to reduce daily oil production during the first half of 2017 in an effort to stabilize global oil prices, which had been sharply dropping since 2014.
The agreement was also supported by 11 non-OPEC states, including Russia and Azerbaijan, which promised to jointly reduce oil output by 558,000 barrels per day. In May, the agreement was extended by nine months until the end of March 2018.