Despite the 16% drop in international oil prices in April and the possibility of OPEC+ further increasing production, major Western oil producers are still committed to their production growth plans.
Zhitong Finance APP learned that, despite a 16% drop in international oil prices in April and the possibility of further production increases by OPEC+, major Western oil producers are still sticking to their production growth plans.
$Exxon Mobil (XOM.US)$、$Chevron (CVX.US)$、$Shell (SHEL.US)$and$TotalEnergies (TTE.US)$When announcing the first quarter Earnings Reports, they maintained their original capital expenditure plans. Only$BP PLC (BP.US)$under pressure from aggressive investor Elliott Investment Management LP, they reduced spending.
The firm stance of these oil giants starkly contrasts with the current market oversupply situation. Oil prices have fallen to a four-year low due to tariff policies threatening global economic growth, dampening Energy demand, and OPEC's unexpected decision to increase production last month.
More critically, according to representatives at the meeting, OPEC+ major member countries are discussing an additional production increase of about 0.4 million barrels per day in June, in preparation for the online policy meeting scheduled for Saturday.
The international oil companies' position of 'increasing production despite falling prices' sharply contrasts with that of US Shale Oil producers, who typically need over $60 per barrel to break even. On Friday, US WTI Crude Oil closed down 1.6% at $58.29 per barrel.$EOG Resources (EOG.US)$On Thursday, the reduction of the 2025 production increase plan was announced.
Trump has repeatedly urged domestic producers to increase production, which is an important component of his USA Energy dominance strategy and also helps stabilize oil prices. On Friday, he further touted low oil prices as an important achievement of his first hundred days in office.
Exxon Mobil and Chevron reaffirmed their plans to increase production by approximately 7% and 9% this year on Friday. Both companies are hopeful for the expansion project of the Tengiz Oil Field in Kazakhstan (which has recently been completed). It is reported that Kazakhstan has repeatedly violated its OPEC production quotas, which has frustrated Saudi Arabia and prompted them to turn to increasing production to penalize the violating oil-producing country.
Rystad Energy Analyst Mukesh Sahdev stated in a report on Friday, "American companies like Exxon Mobil and Chevron in Kazakhstan may become key drivers of supply growth. This raises the question of whether the USA is secretly pressuring OPEC+ to increase production."
Most of Kazakhstan's oil production is operated by foreign companies, and there are almost no signs of any measures to limit the country's oil production. Chevron CEO Mike Wirth stated that in a recent meeting with Kazakhstan's leaders, he did not discuss the possibility of production cuts for the Tengiz project, which will increase to 1 million barrels/day later this year.
He stated on Friday, "The oil we produce at Tengiz is of high value to the government, is important for its fiscal balance, and historically, this oil has never been cut."
Permian Basin shale producer EOG has reduced its annual budget by $0.2 billion, lowering the expected growth rate of crude oil production from 3% to 2%. JPMorgan analysts called this move a "canary in the coal mine" (a metaphor for an early warning sign of danger). More shale oil producers will announce earnings next week, including$Diamondback Energy (FANG.US)$ 、$Occidental Petroleum (OXY.US)$and$ConocoPhillips (COP.US)$。
A drilling contractor headquartered in Houston.$Nabors Industries (NBR.US)$This week, it was reported that based on a survey of nearly half of the Industry, Shale Oil producers plan to reduce drilling platforms by 4% before the end of the year.
Nevertheless, these production cuts have limited impact on Global supply. Evercore Analyst Stephen Richardson stated that the USA Shale Oil industry "is indicating that as the market digests a series of macroeconomic Indicators, it will make only modest (at best) adjustments to low oil prices."
In any case, efforts by independent operators to cut Shale Oil production in the USA are likely to be offset by Exxon Mobil and Chevron, two companies that have developed rapidly in recent years and now hold a much larger share of total production. Chevron increased its output by 12% in the past year to nearly 1 million barrels of oil equivalent per day, while Exxon Mobil aims to reach 1.5 million barrels after acquiring Pioneer Natural Resources, a 25% increase.
With the Global economy expected to slow down and demand affected, all of this adds up to significant Oil & Gas supply.
Nick Hummel, Analyst at Edward Jones & Co. in St. Louis, stated: "In the current level of economic uncertainty, it is hard to see what catalyst could accelerate Oil & Gas demand in the next two quarters. We may be in a moderate CSI Commodity Equity Index price environment from the near term to the mid-term."
Editor/Lee
