On August 22nd, OPEC+ members' restoration of previously cut production is severely constraining US shale oil growth, with industry insiders describing it as a "price war" in recent interviews. The International Energy Agency (IEA) forecasts of deep supply surplus further exacerbate the situation. The shale industry is entering challenging times. FXGT believes this supply-demand imbalance will not only impact the shale sector but also become a core variable in future oil price volatility.

Kirk Edwards, CEO of Latigo Petroleum, stated in an interview: "We won't add rig counts until prices return to and stabilize in the $75 range. By this fall or even 2026, US production will begin to decline." However, this stance contrasts sharply with positions from ExxonMobil and Chevron, both companies still planning capacity expansion in shale fields. Meanwhile, Diamondback Energy's new CEO emphasized that the shale industry is "approaching efficiency limits." FXGT notes these divergent voices highlight a clear trend of strategic differentiation among US shale companies.

While claims of "peak shale oil" may be premature, consensus is forming: in the short term, US shale is unlikely to achieve large-scale production increases again. The reasons remain focused on OPEC+ strategy. As former Pioneer Natural Resources CEO Scott Sheffield stated: "If OPEC maintains oil prices in the $60 range for years, it could force reduced investment in US, Canadian, Brazilian and global exploration projects, ultimately driving industry consolidation." However, recent industry reports suggest OPEC itself cannot sustain low oil price pressure long-term. Saudi Arabia has already begun reducing spending on some economic diversification programs.

Latest IEA data shows crude oil demand growth in early 2025 far below expectations, while OPEC+ has accelerated the rollback of 2.2 million barrels per day production cuts, expected to be completely reversed by end-September. This means supply far exceeds expectations, while demand growth is only 680,000 barrels per day, with 2026 projected at just 700,000 barrels per day. FXGT believes if this trend continues, global inventories could reach historic highs, potentially exceeding levels during the 2020 pandemic lockdowns.

However, IEA predictions are not always precise. If the global economy doesn't experience extreme shocks similar to the pandemic over the next year, achieving "historic surplus" would require demand to slow significantly while OPEC+ and US shale maintain high-intensity production. But as reports show, at least one party is contracting output. Meanwhile, while shale industry efficiency improvements have been effective, they are approaching marginal limits. When prices remain low, production expansion lacks incentive until supply-demand balance is restored. The IEA also stated in its latest short-term outlook: "Low oil prices in early 2026 will force OPEC+ and some non-OPEC producers to cut supply, thereby easing inventory growth in the second half."

The demand-side story is more complex. The IEA has historically emphasized electric vehicle sales growth as a key driver of weakening oil demand, but in this month's report, attributed demand slowdown to poor economic performance in major markets like India and Brazil. External environment uncertainties are intensifying this trend. FXGT believes future oil market determining factors will come not only from OPEC+ or shale oil, but also depend on global economic recovery strength and emerging market consumption potential, directly affecting long-term energy investment and price trajectories.