Commodities
New Mexico studies oil drilling restrictions that would hit output, revenue
By Georgina McCartney
NEW YORK (Reuters) -A top economist for the state of New Mexico, the second-largest oil-producer in the U.S., this week released a study on potential drilling restrictions that could hit up to 5.4% of its future crude output and result in billions of dollars in lost revenue.
The study evaluated setback proposals from the 2024 legislative session, which would restrict how close operators can drill to certain structures and environmental areas. They are intended to protect the public from oil and gas pollution.
“The topic is complicated and required more time to evaluate and analyze than what was provided during the session. This presentation was to provide the committee with further analysis,” said Ismael Torres, chief economist at New Mexico’s Legislative Finance Committee.
“It is too early to know what, if any, setbacks will be proposed in the upcoming session,” he added.
The setbacks evaluated in the report would take effect in 2026 and would affect 15% of new wells in the state, of which about a third would be lost, according to Torres.
That would amount to roughly 12.5 million barrels of oil output lost in the first year, and around 35 million barrels by the early 2030s.
Production value lost would peak at around $4.5 billion annually by 2034.
New Mexico houses portions of the prolific Permian shale field, which also crosses into Texas. The state was producing some 2.04 million barrels per day in July, according to the most recent data from the U.S. Energy Information Administration.
The report estimates more than half of the affected wells are on private land, a quarter of which are in Lea County, one of the fastest-growing oil-producing counties in the United States.
“A statewide setback would not accomplish increased mitigation of human health effects from oil and gas production, but it would be a detriment to the continued development of oil and gas resources and, ultimately, the State of New Mexico,” said Missi Currier, chief executive officer of the New Mexico Oil & Gas Association industry group.
The report was presented to the state’s Legislative Finance Committee on Tuesday.
The setbacks evaluated in the report would prevent operators from drilling within 2,250 feet (686 m) of most residential, education, health or correctional institutions, and halt drilling 650 feet from streams, lakes, ponds, wetlands, or irrigation infrastructure.
It would limit activity within 300 feet of all other surface water.
“The cost to human health and our natural resources far outweigh whatever revenue would be lost to the state,” said Charlie Barrett, a New Mexico environmental advocate and thermographer at the environmental group Earthworks.
“Setbacks are critical to protecting communities, schools and businesses,” he added.
(Reuters) – Citi on Wednesday raised its oil price outlook for 2025 due to geopolitical risks centred on Russia and Iran, but noted prices were likely to ease through the second half of the year.
“The oil outlook could see heightened, sustained geopolitical risks in Iran/Russia-Ukraine potentially wipe out the 2025 oil balance surplus, but the Trump administration appears intent on dealmaking,” the bank said in a note.
Citi expects to average $67 a barrel in 2025, up from a previous forecast of $62. It also said it was lifting its average WTI crude forecast to $63/bbl, without giving its former view.
It added that it was revising up its quarterly Brent forecasts to $75/bbl in the first quarter, $68/bbl in the second, $63/bbl in the third, and $60/bbl in the fourth, also without specifying its previous expectations.
The Biden administration on Jan. 10 sanctioned more than 100 tankers and two Russian oil producers, leading to a scramble by top buyers China and India for prompt oil cargoes and a global rush for ship supply as dealers of Russian and Iranian oil sought unsanctioned tankers.
U.S. President Donald Trump has since laid out a sweeping plan to maximise oil and gas production, including declaring a national energy emergency to speed up permitting, rolling back environmental protections, and withdrawing the U.S. from the Paris climate pact.
Citi said the timing and nature of President Trump’s actions regarding Iran and Russia could be defining features of the oil market and pricing during 2025. It forecast a surplus of 0.8 million barrels per day for the year.
By Arunima Kumar
(Reuters) -Oil prices held steady on Wednesday, with traders closely watching President Donald Trump’s proposed tariffs and the potential impact of the national energy emergency he declared on his first day in office.
futures inched 4 cents higher, or 0.05%, to $79.33 per barrel at 1246 GMT. U.S. West Texas Intermediate crude futures edged 2 cents lower, or 0.03%, to $75.81.
“As more details emerge regarding energy production and trade agreements, traders will assess the balance between economic growth, energy security, and policy risks,” said Dilin Wu, research strategist at Pepperstone.
Trump said late on Tuesday that his administration was discussing imposing a 10% tariff on goods imported from China on Feb. 1, the same day that he previously said Mexico and Canada could face levies of around 25%.
He also vowed duties on European imports, without providing further detail.
“The oil market’s attention is slowly turning away from U.S. sanctions against Russia towards President Trump’s potential trade policy,” said ING analysts, adding that the energy complex has come under pressure with the growing threat of tariffs.
The U.S. president had said his administration would “probably” stop buying oil from Venezuela, among the top suppliers of oil to the country.
Trump laid out a sweeping plan to maximise domestic oil and gas production, including declaring a national energy emergency to speed permitting, rolling back environmental protections, and withdrawing the U.S. from the Paris climate pact.
Trump’s policy is unlikely to spur near-term energy investment or change U.S. production growth, analysts at Morgan Stanley (NYSE:) wrote in a note, adding that it could, however, moderate potential erosion of refined product demand.
Meanwhile, a rare winter storm churned across the U.S. Gulf Coast on Tuesday.
Elsewhere, North Dakota’s oil production was estimated to be down by between 130,000 and 160,000 barrels per day (bpd) due to extreme cold weather and related operational challenges, the state’s pipeline authority said on Tuesday.
By Enes Tunagur
LONDON (Reuters) – Oil prices fell on Tuesday as investors assessed U.S. President Donald Trump’s plans to apply new tariffs later than expected while boosting oil and gas production in the United States.
futures were down $1.42, or 1.77%, to $78.73 per barrel at 1116 GMT. U.S. West Texas Intermediate crude futures were down by $1.97, or 2.53%, at $75.91. There was no settlement in the U.S. market on Monday due to a public holiday.
Pressuring prices on Tuesday was a stronger U.S. dollar, as its strengthening makes oil more expensive for holders of other currencies.
“The current weakness is most probably Trump and dollar-related,” said PVM analyst Tamas Varga.
The dollar rebounded after Trump’s comments on imposing tariffs against Mexico and Canada, Varga added, noting that the dollar’s strength is negatively impacting oil prices.
Trump said he was thinking of imposing 25% tariffs on imports from Canada and Mexico from Feb. 1, rather than on his first day in office as previously promised.
“The initial sense of relief that trade measures weren’t an immediate focus on Trump’s ‘Day 1’ was quickly offset by reports of 25% tariffs on Mexico and Canada as early as February, which saw risk sentiments turn,” said Yeap Jun Rong, market strategist at IG.
Trump did not impose any sweeping new trade measures right after his inauguration on Monday, but told federal agencies to investigate unfair trade practices by other countries.
The U.S. president also said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.
Trump also promised to refill strategic reserves, a move that could be bullish for oil prices by boosting demand for oil.
Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea. Yemen’s Houthis on Monday said they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.
“Reopening of the Suez Canal will create a short-term abundance of supply given the shorter journey times, and that may also weigh on prices in the short term,” said Saxo Bank analyst Ole Hansen.
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