The rise in crude oil extraction from shale in the United States has been lessening the effect of the fighting in Iraq on the price of oil, according to some oil analysts. And a recent report by Barclays says this isn’t just a coincidence.
The increased application of methods such as hydraulic fracturing and horizontal drilling has led to a surge in U.S. crude output and kept the price of oil from rising even further during the past month, according to Nansen Saleri, the CEO of Quantum Reservoir Impact, a consultancy in Houston.
Saleri, once the chief of reservoir management at the Saudi Arabian Oil Co., said the U.S. benchmark crude, West Texas Intermediate, has risen only about $5 to $10 over the past 30 days because of concern about the oil flow from Iraq, the second-greatest producer in OPEC. Without the U.S. surge, that increase would have been more like $20 to $30, he said.
During the week of June 8, the production of U.S. crude increased by 17,000 barrels to 8.477 million barrels, much of it from shale extraction. “The surge in U.S. production is a hugely stabilizing factor,” Saleri told Bloomberg news.
The surge is not only making up for expected shortfalls from Iraq, but also from Libya and Iran, Christof Ruhl, the chief economist of BP, said in New York.