Russian President Vladimir Putin has long made it clear that he is no fan of U.S. shale drilling. But, if he invades Ukraine, he may unwillingly help bring back the American industry.
Like other global producers, the U.S. industry was crushed by the pandemic in early 2020. Oil prices crashed, and prices for crude futures even turned negative on the CME for a brief time. An extremely chastened U.S. industry reemerged, with executives more cautious than ever about throwing money down oil wells and angering shareholders.
The U.S. industry has been making a slow comeback, helped by rising oil prices, which are up more than 50% in the last year. Putins threats against Ukraine have helped drive an already rising oil price well above $90 per barrel to a seven-year high, with nearly 30% of that price rise since the start of the year.
“The last thing they wanted to do was provide a price incentive for a rebound in U.S. oil and gas production,” said Dan Yergin, vice chairman of IHS Markit. “They now succeeded in driving up prices, which is strengthening U.S. oil and gas production.”
Russia has historically been the largest provider of both oil and natural gas to Europe, and the U.S. has long warned that its control of critical energy sources could prove to be a hazard for European consumers. Yergin said Putin has been a strong opponent of U.S. shale, and as far back as 2013, the Russian president told a public forum in St. Petersburg that shale was a grave threat.
For more forex news, please download WikiFX – the Global Dealer Regulatory Inquiry APP.
Leave a Reply