Since the break-even point of most plays lies around $50 per barrel, $40 per barrel impacts US supply stronger than $50 compared to our base case. There is not too much room to the upside as not many projects are viable at $70 per barrel vs $60 per barrel.
Russia generally thrives under lower price environments due to its low full-cycle costs and its ability to increase market share.
For the rest of the world we see declines in our base case scenario accelerating due to an increasing number of projects being shelved in high-cost countries under a mid to low price environment. This will largely affect Canada, but also some large scale deep-water offshore projects.
Research Highlights - Week 9
US supply changes are largely dependent on price sensitive shale developments. While lower prices may limit drilling and completion of projects even for the most resilient companies, a higher price scenario of $70 shows limited additional upside to production (see Mid-Term Outlook, Supply Focus Issue 01).