Tariffs, OPEC+ Decision Rattle Oil Markets

Executive Summary: Rigs: The total US rig count increased by 5 during the week of March 23 to 564. Infrastructure: WTI futures have slipped below $60/bbl for the first time in four years amid mounting uncertainty. Storage: East Daley expects a 1,470 Mbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending April 4.

Rigs:

The total US rig count increased by 5 during the week of March 23 to 564. Liquids-driven basins remained flat W-o-W at 465.

• Anadarko (+2): Mach Natural Resources, Crawley Petroleum Corporation
• Bakken (-2): Devon Energy Corporation, Iron Oil
• Eagle Ford (+1): Kimmeridge Texas Gas, LLC
• Permian (-1):
  • Delaware (-2): Marlin Operating, LLC, Greenstone
  • Midland (+1): Occidental Petroleum

Infrastructure:

WTI futures have slipped below $60/bbl for the first time in four years amid mounting uncertainty. Investors are grappling with twin pressures from OPEC+’s planned production increase of 411 Mb/d in May ’25, plus growing fears that escalating trade conflicts could erode oil demand.

According to our Production Scenario Tools (PSTs), East Daley anticipates minimal impact on near-term production, with some bearish risk to longer-term supply as drilling activity responds to commodity price. Users of our production models can easily run sensitivities at the basin and sub-basin level. Forward price strips, rig counts, and other variables that impact production can be altered to analyze current dynamics.

A newly drilled well often takes several months to begin producing, and any rig reductions would not impact production until late 3Q25 at the earliest. Many public producers would also hesitate to immediately adjust rig activity or 2025 production guidance, especially when operations are supported by commodity hedges and term rig contracts.

Any near-term decrease in rig activity would likely come from producers drilling outside their top-tier acreage, or in basins with more challenged economics. East Daley has noted that rig activity in the Permian Basin historically is less reactive to oil prices due to its more resilient economics.

EDA has estimated the breakeven well economics across multiple basins. Our work indicates that WTI pricing of ~$60/bbl can still lead to economic development in many plays (see chart). However, producers with acreage outside the core of a basin face more marginal drilling economics if price weakness persists.

Storage:

East Daley expects a 1,470 Mbbl injection into commercial and Strategic Petroleum Reserve (SPR) inventories for the week ending April 4. We expect total US stocks, including the SPR, will close at 838 MMbbl.

The US natural gas pipeline sample, a proxy for change in oil production, decreased 0.90% W-o-W across all liquids-focused basins. Samples decreased 2.44% in the Eagle Ford, 1.93% in the Williston and 0.21% in the Permian Basins. The Rockies and the Gulf of Mexico have a high correlation between gas volumes and crude oil volumes, whereas the Permian and Eagle Ford basins correlation is less than 45%.

We expect US crude production to be 13.6 MMb/d. According to US bill of lading data, US crude imports decreased to 566 MMb/d. More than 60% of the supply originated from Canadian pipelines and vessels into the US, with the remainder largely coming from vessels carrying crude from Mexico and Argentina.

As of March 28, there was ~780 Mb/d of refining capacity offline, including downtime for planned and unplanned maintenance. EDA expects gross crude input into refineries to increase, coming in at 15.8 MMb/d.

Vessel traffic monitored by EDA along the Gulf Coast increased W-o-W. There were 22 vessels loaded for the week ending April 4 and 21 the prior week. EDA expects US exports to be 4.0 MMb/d.

The SPR awarded contracts for 6.0 MMbbl to be delivered to Choctaw February –May 2025. The SPR has 396 MMbbl in storage as of March 28, 2025.

Regulatory and Tariffs:

Presented by ARBO

Tariffs:

Red Butte Pipeline LLC. A temporary embargo was placed on all of the transportation movements covered under the tariff, with the exception of transportation movements from the receipt points at Byron Station, WY and Oregon Basin Station, WY for delivery to Silver Tip Station, MT in order to assess the integrity of the facilities. FERC No 188.21.0 IS25-286 (filed April 2, 2025) Effective May 3, 2025.

Tallgrass Pony Express Pipeline, LLC Initial incentive rates were established from origins in Colorado and Wyoming to Cushing, Oklahoma, based on an open season during which potential shippers submitted binding bids for a ship-or-pay minimum volume commitments. FERC No 2.71.0 IS25-284 (filed March 31, 2025) Effective May 1, 2025.

Tallgrass Pony Express Pipeline, LLC A new incentive program was established for movements containing primary origins and destinations and secondary origins and destinations. The program is based upon the terms of the TSAs executed during the period of April 1 through April 30, 2025. FERC No 2.70.0 IS25-283 (filed March 31, 2025) Effective May 1, 2025.

The above information is provided by ARBO’s Oil Pipeline Tariff Monitor. For more information on regulatory proceedings or tariff rates, please contact please contact Corey Brill via email at corey@goarbo.com or phone at 202-505-5296. https://www.goarbo.com/