News Mar 09, 2017 09:04 AM EST

US oil output set to break records in 2018

By April Kirstin Chua

US oil output is expected to rebound this year after a painful war with OPEC. The American oil industry is on the verge of an incredible revival and this is all thanks to healthier prices and strengthened business models.

The US oil comeback is being led by the Permian Basin, which is a hotbed of shale drilling in Texas and New Mexico, reports have found. Permian is so rich in shale oil that it can profitably drill for as low as $50 per barrel range. If this investment continues, US is set to break records in 2018, overtaking the oil output set in 1970.

"Shale has proven to be remarkably resilient. The key is that any dollar invested today is double as efficient as it was two years ago," Tamar Essner, energy director of Nasdaq Advisory Services said in a statement.

People feared for the decrease in production in the US oil industry late 2014 when OPEC decided to keep pumping despite oversupply that sent oil prices to go lower by the day. OPEC's strategy was to keep oil prices far too low and many worried the decline in US oil output.

OPEC's oil price war brought bankruptcies and painful job cuts, as well as, a dip in the US oil production. The current efforts in drilling have gathered enough steam as oil prices rebounded after OPEC abandoned its previous strategy. The EIA has ramped up its US forecasts and predicts daily domestic oil output of 9.2 million barrels for this year and 9.7 million barrels in 2018. A Saudi oil minister affirms the prediction for as long as the US do so gradually.

"It's not a matter of whether the U.S. should or shouldn't invest in its shale and contribute to the global market supply base. It's the pace at which it can supply," Saudi Energy Minister Khalid Al-Falih said in an interview on Tuesday. He noted that US oil drillers can add millions of barrels per day to the global market of the US doesn't strongly increase oil production in the next two years. 

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