US dips into reserves to deal with oil price woes

The Biden administration is also pressuring domestic shale producers to do “whatever it takes” to increase supply and help lower oil prices.

But oil executives cited significant challenges on the industry’s ability to deliver instantly. At the ongoing CERAweek, Occidental Petroleum Corp chief executive Vicki Hollub cited a lack of skilled labour and other supply chain troubles as reasons.

Further, many of the best shale wells have already been tapped and shale wells decline much faster than conventional oil wells.

At OPEC this week, the group’s secretary general Mohammed Barkindo downplayed OPEC’s ability to plug the gap left in the market and noted that Russian exports are crucial to global oil supply. “There is no capacity in the world that could replace 7M barrels per day”  he said.

Russia is the world’s third-largest oil producer behind the United States and Saudi Arabia.

The UAE and Saudi Arabia have spare capacity, however, the Wall Street Journal reported that executives from the two countries declined requests to speak to President Biden. The UAE has since called for OPEC to increase production. Other OPEC+ producers are struggling to meet their output targets due to underinvestment in infrastructure over the last few years, in the case of Iran and Venezuela caused in part by US sanctions on those countries, which limits their ability to drastically lift output immediately.

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