Yahoo Finance Oil Production Impacts Oil Imports and the Tanker Industry
Black Gold Continues to Fall: Tankers Continue to Rise
Oil production
US oil production has been rising due to the shale revolution. Now, the US is rallying for the top producer spot. US domestic oil production (DBO) indirectly affects the crude tanker industry. Domestic production affects the imports that have an impact on the crude tanker industry. Lower domestic production leads to higher imports, all else equal. This has a positive effect on the crude tanker industry.
June crude oil production
Average US crude oil production for the last four weeks—as of June 10, 2015—was 9.5 MMbpd (million barrels per day). That’s almost 13% higher compared to same period last year. The production for the week ending June 10, 2015, was 9.56 MMbpd. This was lower than the previous week’s 9.6 MMbpd.
Outlook
The EIA (U.S. Energy Information Administration) expects US crude oil production to fall through early 2016. Total production is forecast to average 9.2 MMbpd in the first quarter.
It will be interesting to see if the Iran deal impacts domestic oil production. Iran’s nuclear deal puts oil prices under more pressure. Shale oil costs more to produce. It could be hampered if oil prices bottom out.
In contrast, domestic production could continue rising. Currently, US crude oil exports are banned. If the production keeps rising and if the US crude oil export ban is eventually lifted, domestic production and the impact on the tanker industry may not remain the same. Domestic production impacts crude tanker companies like Frontline (FRO), Euronav (EURN), Nordic American Tanker (NAT), Teekay Tankers (TNK), DHT Holdings (DHT), and Tsakos Energy Navigation (TNP). In the next part of this series, we’ll discuss the impact of US production on crude oil imports.
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