OPEC+ Frustrated as U.S. Oil and Gas Efficiency Keeps Production High Amid Price Drop

Amidst a backdrop of plummeting oil and gas prices, the efficiency gains of the U.S. oil and gas industry have emerged as a thorn in the side of OPEC+, frustrating the coalition’s efforts to stabilize global energy markets.

Over the past 18 months, while oil and gas drilling in the United States has decelerated in response to falling prices, production has shown no signs of slowing down.

Exploration and production companies have adapted to the market conditions by concentrating on high-yield sites, speeding up drilling processes, and extending horizontal well sections.

This relentless pursuit of efficiency has kept production levels robust despite the downturn in drilling activity.

In November 2023, the average price of front-month U.S. crude futures stood at $77 per barrel, down from its peak of $121 in June 2022.

Despite this substantial drop, U.S. oil production reached a new monthly record of 13.3 million barrels per day (b/d) in the same month.

Similarly, while natural gas futures prices fell to $3.06 per million British thermal units in November 2023, down from $9.24 in August 2022, gas production climbed to a seasonal record of 3,178 billion cubic feet.

The persistence of production growth in the United States has exerted downward pressure on global energy prices, frustrating the efforts of OPEC⁺ to rebalance the market through output cuts.

While OPEC⁺ attempts to manipulate oil prices through coordinated production adjustments, the efficiency-driven U.S. oil and gas sector remains a formidable force, challenging traditional market dynamics and reshaping the global energy landscape.