Oil prices recorded a slight increase this week amid mounting concerns over potential disruptions to Russian supplies after Ukraine intensified attacks on refineries and export facilities, most notably the “Primorsk” port a key outlet for Moscow’s exports. These developments are raising fears of a sharp shortage in global supply.
At the same time, investors are closely watching the Federal Reserve meeting on September 16–17, where markets are anticipating a possible interest rate cut. While looser monetary policy typically boosts energy demand by reducing borrowing costs, recent U.S. consumption data showed weak spending, adding uncertainty about the true strength of oil demand.
Brent crude held above $67 per barrel, while West Texas Intermediate hovered around $63. These levels represent key pivots; breaking them could set the next direction — either resuming an upward trend supported by geopolitical factors or entering a corrective phase if economic worries prevail.
Meanwhile, markets are expecting a significant drawdown in U.S. inventories of about 6.4 million barrels last week, compared with a 3.9 million-barrel build the previous week, which could offer additional short-term support for prices.
Structurally, the International Energy Agency warned of an accelerating natural decline in production, especially in shale and deepwater fields. Its report revealed that halting investments could lead to a loss of 5.5 million barrels of oil per day annually more than in 2010 while the natural gas decline rate has jumped from 180 to 270 billion cubic meters per year.
Decline rates vary by field type: supergiant fields in the Middle East lose no more than 2% annually, while small offshore fields in Europe can exceed 15%. Shale oil can see declines of over 35% in the first year without continuous investment.
To maintain supply stability through 2050, the industry needs to add more than 45 million barrels of oil per day and around 2,000 billion cubic meters of gas equivalent to the combined production of the world’s three largest producers. The challenge lies not only in the enormous investment required but also in the long development cycles, as projects take nearly two decades from licensing to first production.
This reality highlights a complex equation for energy companies: massive, long-term investments on one side, and mounting pressure to transition to cleaner energy and cut emissions on the other. Any slowdown in investment could threaten sharp market volatility and global energy security crises.
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