5 Mar 2021 Featured in: Mid-Term Outlook - Issue 1

Research Highlights - Week 9

US supply changes are largely dependent on price sensitive shale developments. While lower prices may limit drilling and completion of projects even for the most resilient companies, a higher price scenario of $70 shows limited additional upside to production (see Mid-Term Outlook, Supply Focus Issue 01).

  • Since the break-even point of most plays lies around $50 per barrel, $40 per barrel impacts US supply stronger than $50 compared to our base case. There is not too much room to the upside as not many projects are viable at $70 per barrel vs $60 per barrel.

  • Russia generally thrives under lower price environments due to its low full-cycle costs and its ability to increase market share.

  • For the rest of the world we see declines in our base case scenario accelerating due to an increasing number of projects being shelved in high-cost countries under a mid to low price environment. This will largely affect Canada, but also some large scale deep-water offshore projects.