The US has increased production by 100, 000-200, 000 b/d over the course of the year so far. I expect a slight uptick in the fourth quarter, to bring the year-on-year rise to 200, 000-300, 000 b/d. Brazil has been the one to consistently surprise upwards, while Venezuela has seen steady growth. For 2025, US production is likely to remain flat unless we see a higher price. And with larger resource plays now in the hands of the majors, capital might be deployed in international markets, like Guyana or Nigeria, rather than drill more the US. It’s now more of a portfoliobased decision for the majors. Unlike five years ago when the decision was to drill or not drill the Permian, they have global options that may offer better economics.
Does the outcome of the US election affect its energy production and exports?
It does, but it takes about two years for these policies to really influence fundamental supply and demand. One of the overarching policies launched by the Biden administration is the Inflation Reduction Act (IRA), which included many restrictive measures on oil and gas. For example, US oil production is currently around 13.4 or 13.3 million b/d; about half of that is produced by infrastructure that has been in place for 40 to 50 years. If the measures in the IRA were fully enforced, it could potentially shut down half of that, largely because of penalties on methane emissions, which would make maintaining older infrastructure too costly. However, there has
been some pushback on these policies, as it’s become clear that cutting half of US production isn’t feasible. So, while there may be a relaxing of policies if Trump were elected, it likely wouldn’t move the needle significantly. Harris is also moving closer to the center than Biden on some green policies, acknowledging that the technology for full green energy adoption isn’t quite there yet, and the reality that the US population would not be willing to tolerate brownouts or blackouts.