In the latest quarter, ExxonMobil (XOM, Financial) and Chevron reported significant increases in oil and gas production. ExxonMobil's output grew by 24% year-over-year, buoyed by its $60 billion acquisition of Pioneer Natural Resources. Chevron's production rose by 7%, despite halving its capital expenditure, marking a 27% increase compared to a decade ago.
Royal Dutch Shell and BP also increased their production by 4% and 2%, respectively, even as they pursue aggressive net-zero emission targets more stringent than their American counterparts.
The surge in production from major U.S. oil companies, particularly from the Permian Basin, has contributed to increased downward pressure on oil prices. Over the past six months, global crude demand weakness has led to a 12% drop in oil prices.
OPEC is considering ramping up production, potentially adding to the price decline. They plan to revive a daily supply of 180,000 barrels starting December. However, some analysts suggest that the increase in U.S. production, currently about 50% higher than Saudi Arabia's, might deter OPEC's production boost.
A report from Macquarie warns that with additional supplies from countries such as Guyana and Brazil, global production capacity could grow by 5 million barrels per day by 2025 amidst relatively weak demand growth. This could push Brent crude prices below $70 per barrel from the current $73, barring any significant geopolitical events.
