US crude production may rise and ease prices, says Hardeep Singh Puri

Government hoping to pass Oilfield Amendment Bill in upcoming winter session of Parliament, oil minister says

The United States is expected to increase domestic crude oil production under the upcoming presidency of Donald Trump, potentially expanding global supply and exerting downward pressure on prices, Petroleum and Natural Gas Minister Hardeep Singh Puri said on Thursday.

 

Speaking at the CII Public Sector Enterprises Summit 2024, Puri noted that increased US crude output would likely encourage other producers – apparently members of the Organization of the Petroleum Exporting Countries -- to revisit their recent output cuts.

 

“Today, more production is coming into the global market from the Western Hemisphere — from Brazil, Guyana, Canada, and the United States,” Puri remarked. Recalling his recent visit to the Gastech conference in Houston, he added, “I was told that former President George W Bush suggested U.S. production would increase, irrespective of the election results. Today, if you were to say the US produces 13 million barrels per day (bpd) of crude oil, and it would add another, it would be a safe statement. In other words, more oil is coming into the market.”

 

 

US Energy Information Administration data reveals the country maintained crude production levels above 13 million bpd for seven consecutive months, from February through August. Meanwhile, global benchmark Brent crude prices have largely stayed under $80 per barrel since late August, with the exception of a brief spike on October 7 due to heightened tensions between Israel and Iran.

 

The US was India’s fifth-largest crude supplier during the first five months of the 2024-25 — a position it has held since 2022-23, despite India securing substantial discounts on Russian oil over the last two years. In June and July, imports from the US rose by 33 per cent and 39.8 per cent year-on-year, respectively, before dropping sharply by 80 per cent in August, according to data from the Commerce department. 

 

According to S&P Global Commodity Insights, US crude exports to Asia in the January-October period of 2024 fell by around 88,000 bpd or 5.7 per cent year-on-year, primarily due to a steep drop in shipments to China, which fell to 155,000 bpd from 305,000 bpd in 2023. This shift, officials believe, could provide Indian and other Asian buyers with additional leverage to negotiate more favourable prices in the 12 months.

 

Asian buyers of US oil are likely to see more opportunities to secure attractively priced crude, analysts suggest. “With growth in US crude production and exports, the US will continue to compete with Opec exporters in Asia, while targeting European refiners and developing new markets in Africa and Latin America,” explained Benjamin Tang, head of liquid bulk at S&P Global Commodities at Sea.

 

Pending legislation

 

Puri announced that the government looks to pass the Oilfields (Regulation and Development) Amendment Bill, 2024, during Parliament’s Winter session, set to commence on November 25. Initially introduced in August, the Bill seeks to replace regulations dating back to 1948, which were last amended in 1969. The amendment seeks to introduce the concept of a “petroleum lease”, establishing it as a distinct category separate from mining leases. As petroleum extraction will no longer be classified as a mining activity, the Bill calls for the creation of a separate category for environmental clearances for oil and gas projects.

 

Aiming to streamline business operations in the exploration sector, the Bill broadens the range of hydrocarbons covered by replacing the term 'Oils' with 'Mineral Oils.' This change extends the legislation’s scope to include a wider variety of mineral oils such as shale oil, gas hydrates, and coal bed methane.

 

On Thursday, Puri said 38 per cent of bids received by the government in the last Open Acreage Licensing Program (OALP) IX bidding round for oil and gas assets are in the 1 million sq km no-go area of India's sedimentary basin which has been newly opened up.