This is not to say that we think US production is set to contract in 2023. There is still a clear incentive for US production in the form of both high prices and increased export capacity, particularly to Europe. But the headwinds facing the industry in the form of a slowdown in expected demand, increased regulatory scrutiny and more difficult access to capital may prevent production from reaching its pre-pandemic heights in 2023. The US remains a seller – for now One source of commercial inventory “growth” in 2022 came from storage facilities rather than from the ground as authorities (particularly those in the US) released significant amounts of oil from emergency stockpiles. We expect the Biden administration to remain aggressive in terms of reducing the Strategic Petroleum Reserve (SPR) in an effort to combat high energy prices. But that does not mean the US will only sell from its SPR in 2023. The Biden administration has already announced plans to begin buying oil again next year to restock the SPR at a price target of around $70 / barrel. Expectations of purchases to eventually refill the storage facilities of the US and those of its IEA allies that have also released emergency stockpiles may limit downward pressure for oil prices in 2023, as potentially large buyers are lurking should prices drop further. ESG and the global energy transition From an oil and gas production perspective, we think it is too simplistic to suggest that the relatively slow investment in oil and gas extraction since the pandemic is purely a function of ESG-related issues. That said, private investor demand for investment in clean energy alternatives coupled with public sector pressure on energy production is likely, in our view, to be a theme that overhangs global energy markets over the next decade and beyond. For a deep dive on this, listen to our Year Ahead podcast on how energy market shocks could affect the transition to a green economy. For any terms used, please refer to this glossary The Year Ahead 2023 | 8