Rising oil price hit US producers

The rise in oil prices caused US producers to write off tens of billions of dollars in hedge losses. Despite the oil price peaking at $75 in 6 years, a third of 11 million barrels of daily US production is sold at $55.

According to the Financial Times, which is based on IHS Markit data, the hedge loss of US oil producers reached $ 7.5 billion in the first half of 2021. Losses are expected to rise to $20 billion by the end of the year if the price of oil stays at $75. Many experts also state that the loss may be higher.

This situation relieves OPEC’s hand in the face of rising prices. “Existing contracts are causing US producers to sell oil at low prices,” Enverus analyst Bill Farren-price said. “So OPEC is not worried that high prices will cause a production boom in the US.”

As a result of the disagreement between Saudi Arabia and the United Arab Emirates last week, OPEC+ could not decide to increase production. After the meeting, there was a sharp increase in the price of oil.

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