Permian Basin Record Output Despite Fallin Rig Count Reshape Global Oil Supply

Di Permian Basin, straddlin West Texas an New Mexico, a deliver a productivity miracle weh confound analysts. Production reach 6.5 million barrels per day (bpd) in November, an all-time high, even doh di active rig count drop to 268, a 18% fall from di peak of 327 in early 2024. Di Energy Information Administration (EIA) credit longer laterals some now exceedin 4,500 metres along wid simul-frac an electric frac fleets, weh cut completion cost by roun 22% per well.

Pioneer Natural Resources, now a unit of ExxonMobil after di US$64.5 billion acquisition, an Diamondback Energy lead di charge. Exxon CEO Darren Woods tell investors seh di company expect Permian output fi reach 2.3 million bpd by end of 2027, wid breakeven prices below US$35 per barrel WTI. Chevron, Occidental an ConocoPhillips also a report similar gains, wid average well IP30 rates climbin past 1,800 boe/d in di Midland sub-basin.

Fi Jamaica an di wider Caribbean, di Permian boom translate into more US light sweet crude available fi export through Corpus Christi an Houston. Petrojam, weh historically run heavier Venezuelan grades, did test WTI Midland cargoes in 2024 an could increase di share if pricing remain favourable. Di Brent-WTI spread widen to roun US$5.50 per barrel, makin US barrels attractive fi Atlantic basin refiners. Reuters report seh di Caribbean a now di largest single destination fi US crude exports, ahead of Europe an Asia, wid Aruba an Curacao terminals handlin storage an blendin.

Pipeline takeaway capacity remain a constraint. Di Matterhorn Express gas pipeline come online late 2024, but oil egress projects like di proposed EPIC Crude expansion still a wait final investment decision. Associated gas flarin in di Delaware sub-basin draw scrutiny from di Texas Railroad Commission, an methane intensity targets under di Inflation Reduction Act now charge US$900 per tonne fi excess emissions. Producers a invest heavily in vapour recovery an electrification fi avoid di penalty.

Di productivity gains also a put pressure pon OPEC+ market management. Saudi Arabia private estimate reported by Bloomberg suggest US tight oil could add 800,000 bpd in 2026 alone, eatin into di space created by di voluntary cuts. Dis dynamic likely fi keep Brent capped below US$95 unless geopolitical shocks intervene. Fi Jamaica importers, di forward curve in backwardation suggest spot purchases remain di better strategy, an di Petroleum Corporation of Jamaica a use a mix of term contracts an spot tenders fi minimise cost.

Longer term, di Permian a face geological headwinds. Tier-one acreage a getting drilled out, an parent-child well interference a reduce per-well economics in some sections. Industry consultancy Enverus project peak Permian production roun 2029 at 7.5 million bpd, after which natural decline take over. Fi now, however, di basin remain di single most important swing producer in di global oil market, an Jamaica benefit indirectly from di supply discipline it impose pon OPEC+.