According to the shale patch’s largest operator, US Oil producers are unable to raise output to temper surging crude prices that remain “under Opec supervision.” Last week, Brent crude hit a three-year high above $80 a barrel, stoking worries of a deepening global energy crisis that has already driven natural gas and coal prices to record highs in Europe and Asia. But, according to Scott Sheffield, CEO of Texas-based Pioneer Natural Resources, America’s once-prolific shale companies would continue to use their increasing cash piles to pay shareholders rather than invest in new drilling.
Sheffield said, “Everybody’s going to be disciplined, regardless whether it’s $75 Brent, $80 Brent, or $100 Brent. All the shareholders that I’ve talked to said that if anybody goes back to growth, they will punish those companies. So I don’t think the world can rely much on US shale.” This year, Pioneer purchased two rival Texas producers, making it the Permian Basin’s most significant single Oil producer, producing nearly 360,000 barrels per day — more than some of the Opec Oil cartel’s smaller members.
It has stated that any increase in output next year will be limited to 5%, well below the double-digit rates of previous years. The Pioneer chief’s comments come as the US government pressure Saudi Arabia, Opec’s de facto leader, to increase crude supply to keep further energy price inflation in check. On Monday, the extended Opec+ alliance, which includes allies such as Russia, will meet to decide whether to keep output quotas in place.
Last year, the group agreed to severe output cuts to back up crude prices after pandemic lockdowns reduced energy use. However, as economies recover, supplies are falling short of demand, with global crude stockpiles dropping at an all-time low, according to Goldman Sachs.