After a slow start to the year, oil prices have shot skyward in the wake of an announcement by OPEC+ that it will be cutting oil output to around 1.16 million barrels a day, with both brent and crude oil jumping 5.66 per cent and 6.14 per cent respectively, currently trading at US$84.41/Bbl and $79.93/Bbl (10:43 am UTC+ 8 hours).
(Crude Oil Price over the past week via Trading Economics, accurate as of 9:55 am UTC+ 8 hours)
(Brent Crude Oil Price over the past week via Trading Economics, accurate as of 10:43 am UTC+ 8 hours)
Shockwaves from the OPEC cut have already hit the share market, with Australian energy giants Woodside and Santos feeling the heat, seeing their share prices jump 2.63 and 4.34 per cent respectively between the end of last month and the 3rd of April.
It marks another upset in oil as countries around the world scramble to secure supply and maintain energy security in the face of vitality from top supplier Russia due to the ongoing war in Ukraine, which caused oil to hit its highest prices in just over 10 years when it broke out in February last year.
According to the International Energy Agency, global oil markets were already set to tighten in the second half of this year, with demand set to hit 2.6 mb/d in 4Q23 and a considerable supply deficit potentially emerging. The IEA expects these cuts by OPEC+ countries will only accelerate this tightening, pushing oils price further skyward, with Brent expected to hit around US$95/Bbl and Crude estimated to reach just below US$89/Bbl this time next year.
However, this new gap in the energy market creates an opening for smaller players to make their name.
The oil surge couldn’t have come at a better time for Brookside Energy (ASX: BRK). The Company released its annual financial report within hours of the OPEC announcement, revealing it had brought in $15.1m in profit as it marks significant YoY growth in oil production and revenue after a transformative 2022.
Brookside, an up-and-coming player in Oklahoma’s renowned Anadarko Basin, brought both its Flames and Ranger Wells online in the last twelve months to massive success, with history looking to repeat itself via its youngest Wolfpack Well, producing over 40,000 barrels of oil equivalent and generating an estimated US$2.5 million in its first month of early flow-back.
The Company has seen its share price jump over 13 per cent between the 31st of March and the 3rd of April to trade at 1.3c.
It’s a similar story for Buru Energy which released its annual report for 2022 just last week, detailing the Company’s extensive operations at its Canning Basin and Carnarvon Basin operations in Western Australia.
Buru (ASX: BRU) currently owns and operates 50 per cent of the Ungani Oilfield Project, with the Company producing 189,000 barrels of oil from the Project last year and securing a steady revenue stream totalling A$13,893,000 from exports to the Southeast Asian market.
In Western Australia, Triangle Energy (ASX: TEG) is also looking to become a big oil player, having just completed its acquisition of Production Licence L7, otherwise known as Mount Horner, in the Northern Perth Basin and adjacent to the prolific Dandaragan Trough.
The Company has been shoring up the Project before the acquisition as part of its exploration strategy of uncovering additional reserves within already proven oil fields, with the Project holding the best estimate of Oil Prospective Resources to produce 19 million barrels of oil, with the final acquisition seeing the explorers share price jumping 11.11 per cent.
The cuts will take effect in May, setting the stage for an interesting back half of the year for the energy market.