Commodities Weekly: US Oil Production Has Peaked
- By Viresh Kanabar
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- 4 min read
Summary
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- US oil production has now peaked and will likely decline slowly over the next six to eight months.
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- Declining production provides OPEC+ with more market power as the US has been the largest source of global supply growth this year.
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- Markets pricing out a recession cuts off the left tail to global demand but does not open up the right tail. This will be driven by Chinese demand.
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- Expect Saudi Arabia to extend production cuts through September.
Summary
-
- US oil production has now peaked and will likely decline slowly over the next six to eight months.
-
- Declining production provides OPEC+ with more market power as the US has been the largest source of global supply growth this year.
-
- Markets pricing out a recession cuts off the left tail to global demand but does not open up the right tail. This will be driven by Chinese demand.
-
- Expect Saudi Arabia to extend production cuts through September.
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