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The world’s biggest oil producer will see a drop in output next year as a result of the dramatic collapse in prices that already is forcing drillers to cut back on capital spending.
U.S. oil output will average 12.7 million barrels a day in 2021, down from an expected 13 million barrels this year, the Energy Information Administration said March 11.
That would mark the first year-on-year decline since 2016.
The Energy Department’s statistical arm expects monthly output figures to start falling around May this year in light of the recent price rout. The agency forecasts Brent, the global benchmark crude, will average $43.30 a barrel this year, down from earlier expectations of $61.25.
West Texas Intermediate crude closed below $35 a barrel March 10, well below the break-even price for most American shale fields. The downturn comes as Saudi Arabia and Russia vie for control of the global oil market, each vowing to unleash huge volumes of cheap crude at a time when the coronavirus pandemic has obliterated energy demand.
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