Oil Market Needs Half-Trillion-Dollar Injection to Ensure Supply

Moody’s sees peril in massive shortfall in drilling budgets
Energy explorers are not responding as usual to price rallies

The Chevron Corp. Jack/St. Malo deepwater oil platform stands in the Gulf of Mexico in the aerial photograph taken off the coast of Louisiana, U.S., on Friday, May 18, 2018. While U.S. shale production has been dominating markets, a quiet revolution has been taking place offshore. The combination of new technology and smarter design will end much of the overspending that's made large troves of subsea oil barely profitable to produce, industry executives say.Photographer: Luke Sharrett/Bloomberg

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By Josyana Joshua

October 7, 2021 at 4:01 AM UTC

This article is for subscribers only.

Oil explorers need to raise drilling budgets by 54% to more than half a trillion dollars to forestall a significant supply deficit in the next few years, according to Moody’s Investors Service Inc.

Crude and natural gas drillers chastened by last year’s unprecedented collapse in demand and prices haven’t responded to the recent market rebound as the industry typically does by expanding the search for untapped fields. While international crude and U.S. gas have risen more than 50% and 120% this year, respectively, drilling outlays are only forecast to increase by 8% globally, Moody’s said in a report Thursday.