Energy News Today

Texas freeze helps rival oil exporters like Saudi Arabia, OPEC members

Pump jacks operate in the Permian Basin in Midland, Texas, U.S, on Saturday, Feb. 13, 2021.

Matthew Busch | Bloomberg | Getty Images

The shock winter storm in Texas that left millions without power and took dozens of lives also froze a major local commodity: the Lone Star state’s oil production, slashing some 4 million barrels per day from U.S. output. 

The consequence will be a boost in revenue and potentially increased exports among rival oil-producing nations, commodities experts say. 

Analysts estimate the total volume of oil lost to Texas’ production freeze at anywhere between 18 million and 40 million barrels and roughly one-fifth of U.S. refining capacity was shut in. And while temperatures are moving upward again and production is expected to mostly recover by the end of this week, the impact of the deficit on oil markets is already visible in the recent jump in crude prices.  

International benchmark Brent crude is up more than $6 per barrel since the storm began hitting Texan production facilities in mid-February. U.S. benchmark West Texas Intermediate has risen about $3 per barrel.  

The development, while adding yet another blow to Texas on top of the devastating damage and human suffering wreaked by the once-in-a-decade storm, translates on the global market into a likely boon for other oil producers, like those in the Middle East.  

“The Texas storm helps Saudi and its partners tremendously because it accelerates the path to inventory normalization,” Peter Sutherland, president of Houston-based energy investment firm Henrietta Resources LLC.  

“Concurrent drawdowns of both crude and refined products are a big tailwind heading into spring,” he told CNBC. “It’s not just positive sentiment; the roughly 40 million barrels lost due to the storm help tighten the market.”

OPEC expected to increase production

‘Very small on a global basis’

Read More:
Texas freeze helps rival oil exporters like Saudi Arabia, OPEC members

2021-02-26 00:25:00

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy
%d bloggers like this: