The United States likely surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer earlier this year, based on preliminary estimates in EIA’s Short-Term Energy Outlook (STEO). In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.
Although EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in STEO, EIA expects that U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production for the remaining months of 2018 and through 2019.
U.S. crude oil production, particularly from light sweet crude oil grades, has rapidly increased since 2011. Much of the recent growth has occurred in areas such as the Permian region in western Texas and eastern New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana.
The oil price decline in mid-2014 resulted in U.S. producers reducing their costs and temporarily scaling back crude oil production. However, after crude oil prices increased in early 2016, investment and production began increasing later that year. By comparison, Russia and Saudi Arabia have maintained relatively steady crude oil production growth in recent years.
Saudi Arabia’s crude oil and other liquids production data are EIA internal estimates. Russian data mainly come from the Russian Ministry of Oil, which publishes crude oil and condensate numbers. Other sources used to inform these estimates include data from major producing companies, international organizations (such as the International Energy Agency), and industry publications, among others.
According to the Marketwatch article “Oil rallies as drop in domestic crude supplies, hurricane fears lift U.S. prices past $70” by Myra P. Saefong and Mark DeCambre published Sept, 12, 2018, U.S. crude production eased back by 100,000 barrels last week to 10.9 million barrels a day, the EIA said.
The data followed a monthly report Tuesday from the agency that cut the forecast for 2018 and 2019 output.
“The idea that U.S. oil production will fall into the end of the year not only removes one of the notable headwinds on oil in 2018, it will now act as a tailwind for the energy markets,” said Tyler Richey, co-editor of the Sevens Report.
As to Saudi Arabia and Russia and the OPEC crowd, for the last several years, they have been under-producing on purpose to force the price of a barrel of oil up.
As we see from the Marketwatch article “Oil prices drop to 1-week lows as Gulf Coast storm Gordon misses major energy sites” by Myra P. Saefong and Rachel Koning Beals published Sept. 5, 2018, OPEC, whose de facto leader is Saudi Arabia, and Russia agreed in late June to begin ramping up crude production after more than a year of holding back output.
A Bloomberg survey this week showed that OPEC output rose in August to 32.74 million barrels a day—the highest level this year—up 420,000 barrels a day from July.
So that is a dynamic situation subject to change as OPEC ramps production back up while U.S. production falls as was made clear in the Marketwatch article “Oil ends higher after report that major producers have further eased output curbs” by Myra P. Saefong and William Watts published Aug. 27, 2018 3:10, as follows:
Oil futures ended higher on Monday, sticking to a tight trading range as a committee of OPEC and non-OPEC producers reportedly revealed further progress in easing output curbs, as expected.
In a conference call Monday, the Joint Ministerial Monitoring Committee said that countries participating in the oil production-cut pact that was implemented at the start of 2017 fell to 109% in July, according to report from Reuters, citing two sources familiar with the matter.
That’s down from the committee’s reported compliance of 121% in June and 147% in May.
The call between members of the monitoring committee, which had been postponed from last week due to Muslim holidays, came after the Organization of the Petroleum Exporting Countries and a group of other major producers, led by Russia, agreed in June to effectively boost production back to the level pledged to in a January 2017 pact on output curbs.
According to the Marketwatch article “Oil posts a modest loss on U.S.-China trade worries” by Myra P. Saefong and Mark DeCambre published Sept. 17, 2018, U.S. Energy Secretary Rick Perry told reporters, at a meeting with Russian Energy Minister Alexander Novak in Moscow on Friday, that Saudi Arabia and Russia are among oil producers that are to be admired and appreciated for helping to make sure that the world does not see a spike in oil prices, Reuters reported Friday.
Meanwhile, a Reuters report, citing sources familiar with the matter, said that a meeting of the OPEC and non-OPEC Joint Technical Committee would be held Monday and that one big theme of the meeting is managing expected production increases after agreeing earlier this year to ease some curbs to output.
The JTC monitors the level of compliance with the production-cut pact between the Organization of the Petroleum Exporting Countries and other major producers, including Russia.
The next meeting for the Joint Ministerial Monitoring Committee, which is tasked with ensuring that the objectives of the production-cut agreement implemented in January 2017 are met, is scheduled in Algiers for Sept. 23.
At that meeting, members of the JMMC may discuss the possibility of raising oil production by more than 1 million barrels a day, Novak told reporters Monday, according to a report from Russian news agency TASS.
Back in June, OPEC said its members and allied producers agreed to increase oil production by 1 million barrels a day to essentially rein in production curbs and avoid a potential supply shortage.
At its gathering in August, the JMMC, based on a report prepared by the JTC, said countries participating in the original output-cut pact fell to 109% in July, down from the committee’s reported compliance of 121% in June and 147% in May.
So it remains a question as to whether or not we will remain on top in terms of production, which is being manipulated to control the price of a barrel of oil.