The Lone Star State’s oil production was frozen after last month’s extremely severe winter storm had wreaked havoc across many important parts of the region. According to analysts, about 4 million barrels have been lost daily, while the total volume wasted from the freeze ranges from 18 million to 40 million barrels. As consequence, around one-fifth (⅕) of the country’s refining capacity had been disabled.
Nonetheless, the local oil producers expect that everything will recover by the end of the week, since the temperatures are returning to normal degrees. Yet Texas oil-freeze had an impact as the prices of oil have been increasing due to the recent shortage in oil production.
While the oil-freeze occurrence was a bane to the state of Texas it is seen as a potential boon to other oil producing companies, particularly those located in the Middle East.
Perceived Global Impact of the Texas Oil Production Shortage
Many commodity experts perceive that the oil freeze in Texas will propel the revenue of the close competitors of Texas-based oil producers. Not a few oil producing countries anticipate a potential increase in their oil exports.
The scenario is that the disturbance in the Texas oil supply can result to Saudi Arabia and the Organization of Petroleum Exporting countries (OPEC) increasing production and their prices for exported oil products.
Still, several market analysts hold opposing views that the recent oil-freeze events in Texas have a significant impact, but not enough to create a global disruption in oil production. They contend that the 4 million barrel daily loss is only a small amount compared to the global basis.
Rene Santos, S&P Global Platts Analytics,Manager for North America supply remarked that freeze-offs are not uncommon occurrences, although the degree of the recent freeze-off was unusual in Texas. Nonetheless, there is no need to worry as Santos claims that freeze-offs are usually short-lived.
Senior analyst at PVM Oil Associates Tamas Varga agrees with Santos, saying that oil production will soon be back to normal, to which the deficit created by the Texas winter storm will have a minor impact. .