There are also additional sources of supply that could enter the market. So far, US production has stayed well below pre-Covid levels as oil companies choose to return bumper
Renewables affect investment in oil
profits to investors. The drive towards renewable energy resulted in many
fossil fuel companies reducing expenditure on the drilling of new wells which limited their ability and willingness to increase oil output. However, according to their latest Short-Term Energy Outlook report, the US Energy Information Administration (EIA) expects US production to ramp up for the rest of 2022 and into 2023. US crude oil production is predicted to average 11.8 million b/d in 2022 and 12.6 million b/d in 2023, which would set a record for the highest US crude oil production during a year. The current record is 12.3 million b/d, set in 2019. This would significantly aid the market. Iran is another country that has the potential to help ease the oil supply deficit. The US has sanctioned exports of Iranian oil since 2018 after failing to reach a nuclear weapons agreement. Should the nuclear deal be revised, as has been discussed recently, 1-2 million b/d of oil could return to the market in a relatively short amount of time. Other producers such as Canada, Norway, Brazil and Guyana could also bring more oil onto the market. However, none of them are considered producing powerhouses. Further releases of strategic reserves from members of the International Energy Agency (IEA) could also help ease tight supply. Finally, the Group of Seven (G7) recently announced that they will be placing a
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