US oil execs see slight output growth, cite geopolitical uncertainty
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IN SHORT
U.S. oil executives foresee modest production growth, tempered by geopolitical and regulatory concerns, while input costs rise. In contrast, lithium producers are optimistic about market recovery, driven by strong demand for battery storage, which compensates for slower electric vehicle sales. Meanwhile, renewable diesel producers are redirecting sales to Texas from California, benefiting from Texas's excise tax abatement that makes the fuel competitive with conventional diesel.
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Who's Involved
Dallas Fed
organization conducting a survey of U.S. oil executives
U.S. oil executives
anticipating slight output growth and citing uncertainties
Lithium producers
optimistic about market recovery driven by battery storage
Industry executives
noting energy storage as a primary growth driver
U.S. Gulf Coast renewable diesel producers
shifting sales to Texas due to slowing California demand
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Key facts
U.S. oil executives anticipate slight output growth at current prices.
Geopolitical uncertainties and regulatory issues cloud the long-term outlook for U.S. oil production.
Input costs for oilfield services have jumped significantly.
Lithium producers are optimistic about market recovery.
Demand for battery storage systems is booming and offsetting slower electric vehicle sales.
Energy storage is identified as a primary growth driver for the lithium market.
U.S. Gulf Coast renewable diesel producers are shifting sales to Texas.
Slowing demand in California is a factor in the shift of renewable diesel sales.
Record U.S. output of renewable diesel is occurring.
Texas's excise tax abatement makes renewable diesel competitive with conventional ULSD.
U.S. oil executives anticipate a slight increase in domestic oil production, contingent on current price levels. However, their long-term outlook is clouded by geopolitical uncertainties and regulatory issues. Input costs for oilfield services have seen a significant jump, according to a Dallas Fed survey.
In a separate sector, lithium producers are expressing increasing optimism regarding a market recovery. This positive sentiment is largely attributed to booming demand for battery storage systems, which is effectively offsetting a slowdown observed in electric vehicle sales. Industry executives highlighted that energy storage has emerged as the primary growth driver, establishing a robust foundation for the lithium market.
Meanwhile, U.S. Gulf Coast renewable diesel producers are redirecting their sales towards Texas. This shift is occurring due to slowing demand in California and record U.S. output. Texas's excise tax abatement program is making renewable diesel competitive with conventional ultra-low sulfur diesel (ULSD).
↳ Why This Matters
U.S. oil executives anticipate a slight increase in domestic oil production, contingent on current price levels. However, their long-term outlook is clouded by geopolitical uncertainties and regulatory issues. Input costs for oilfield services have seen a significant jump, according to a Dallas Fed survey.
Frequently asked questions
U.S. oil executives expect domestic oil production to increase slightly, with internal expectations for 2% to 3% growth at current prices.
Executives are concerned about geopolitical uncertainties, regulatory issues, and rising input costs, such as labor, fuel, and diesel.
Two-thirds of respondents believe WTI prices would peak at $125 or less, while 20% expect it to be between $125 and $150.
Many executives believe the oil market has been permanently re-ordered, with a continued risk premium expected from the Persian Gulf.
What Happens Next
01Monitor geopolitical developments in the Middle East and their impact on oil prices.
02Observe upcoming OPEC+ meetings for production decisions.
03Track U.S. regulatory policy changes affecting the energy sector.
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