Oxy CEO states that oil producers are in a 'dire situation' and unable to increase output.

• This year, U.S producers anticipated maintaining flat oil production, but with rising crude prices, output cannot be easily increased, according to Vicki Hollub, CEO of Oxy.
• While the Permian Basin faces challenges in increasing output, it is the only shale basin in the U.S. capable of doing so, according to Hollub.
• The challenges include the age of the wells, labor shortages, and securing raw materials.

U.S. producers cannot immediately increase output as oil prices reach their highest levels since 2008, according to CEO Vicki Hollub.

"The pandemic is causing a global supply chain crisis, and we need to grow production despite this," she stated on Tuesday at CERAWeek by S&P Global.

Producers in the U.S were anticipating to maintain production at a steady pace this year, but with the increase in crude oil prices, it is not possible to immediately increase output, according to Hollub.

Growing at a rapid pace is extremely challenging due to supply chain difficulties, as she stated.

The Permian Basin is producing oil at pre-pandemic levels, but faces challenges in increasing output, according to Hollub. She noted that it is the only shale basin in the U.S. capable of increasing production.

The oil industry is facing challenges such as declining production from wells, labor shortages, and difficulties in securing raw materials. Although the industry had anticipated these obstacles, it was not prepared for the need to rapidly increase oil production.

"At this time, with supply chain challenges, it's not possible to increase production in the United States at the required level for both our country and the world. We're facing a significantly challenging situation," she stated.

Amid the pandemic, energy companies have transformed into a new industry, with capital discipline taking precedence over growth. Companies prioritized debt repayment, cash distribution to shareholders, and cost control.

Although Hollub stated that investors perceive capital discipline as "essentially no growth," she emphasized that Oxy possesses a "huge inventory of high-quality investments" globally, particularly in the U.S. shale basin. Currently, the company is concentrating on returning capital to shareholders. Recently, Oxy announced plans to increase its quarterly dividend to 13 cents per share from 1 cent.

She stated that it is necessary to return cash to shareholders through dividends or buybacks, particularly during good times, as Oxy is positioning itself to break even at $40 per barrel of oil.

On Tuesday, the price of the U.S. oil benchmark fluctuated around $126 per barrel.

On Friday night, a filing with the Securities and Exchange Commission revealed that Warren Buffett's Berkshire Hathaway took a stake in the oil company, Occidental Petroleum. Berkshire now owns 91.2 million shares of Occidental, worth approximately $5.1 billion at Friday's closing price of $56.15.

According to a report in The Wall Street Journal, Carl Icahn has sold his 10% stake in the company.