According to several analysts, US shale oil drillers are expected to overcome their long-standing cautious stance and increase oil production, following a 68% surge in crude prices over the past five weeks after US-led attacks on Iran. Mike Sommers, CEO of the American Petroleum Institute (API), recently stated in an interview that high oil prices will undoubtedly drive US production growth in the coming months. Enervus forecasts that total US oil supply will rise by 240,000 barrels per day this year to a record 13.9 million barrels per day, reversing a pre-conflict projection of a 100,000 barrel per day decline due to concerns about market oversupply. Initial increases will come from drilled but uncompleted wells (DUCs). Rystad analysts now project output in the Lower 48 states to grow by 191,000 barrels per day, compared with a pre-war estimate of an 80,000 barrel per day drop. Citigroup noted that some major shale companies will deploy more rigs in the second half of this year, implying that key operators could add over 100,000 barrels per day of production by 2027. The bank predicts that, combined with further expansion by private drillers, US shale output could increase by 815,000 barrels per day by 2028. Jason Gabelman, an analyst at TD Cowen, suggested that Exxon Mobil (XOM) and Chevron (CVX) have a "higher probability" of raising shale output than their peers. Exxon Mobil had previously outlined an aggressive growth plan through 2030, while Chevron, after years of expansion, had guided for a production "plateau." Harold Hamm, CEO of Continental Resources, last week became the first prominent shale executive to publicly commit to increasing output. On Monday, crude futures edged higher. Former President Trump had stated that Iran must agree to open the Strait of Hormuz by Tuesday evening or face threats of attacks on its power plants and other civilian infrastructure. Robert Yawger of Mizuho noted in a report that the market is highly sensitive to news and currently caught between reports of an imminent ceasefire and President Trump's threat to strike Iranian infrastructure if the Strait is not reopened by Tuesday. The NYMEX May crude futures contract rose 0.8% to settle at $112.41 per barrel, the highest close since June 16, 2022. June Brent crude futures gained 0.7% to $109.77 per barrel. However, NYMEX May natural gas futures fell 0.4% to $2.811 per million British thermal units, the second lowest settlement this year. Related ETFs include the United States Oil Fund (USO) and the United States Brent Oil Fund (BNO).
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