Oil Production Reduction

The Texas Railroad Commission, which oversees oil production in Texas, has proposed a 20% reduction in oil production. This proposal is being objected to by larger oil producers, such as Exxon.

The OPEC/OPEC+ meeting last week resulted in an agreement that totaled a reduction of 9.7 million barrels per day (bpd) between all members combined.

Oil production in Texas accounts for roughly 4 million bpd, so a 20% reduction would be 80,000 barrels.

However, due to economic pressures and the expense of shale oil drilling being so high, shale oil producers across the country are projecting a reduction in oil production of 1.59 million bpd.

“The latest data from the EIA’s Drilling Productivity Report sees widespread production declines across all major shale basins in the country. The Permian is set to lose 76,000 bpd between April and May, with declines also evident in the Eagle Ford (-35,000 bpd), the Bakken (-28,000 bpd), the Anadarko (-21,000 bpd) and the Niobrara (-20,000 bpd).” Oilprice.com

This is a total reduction in agreed oil production globally of 9.7+1.59 million bpd= 11.29 million bpd.

Considering that oil demand has declined by at least 25 million bpd, this leaves a projected oil production surplus of 13.71 million bpd. Oil storage in the US is reaching capacity and may reach that capacity within 2 months. Which will mean a screeching halt to oil production at least in some regions very soon.