According to a report prepared by the Energy Information Administration (EIA), US oil production has currently reached its highest levels and stands as the largest producer worldwide.
With production averaged at 10.9 million bpd in August, production is expected to average 10.7 million bpd in 2018; up from 9.4 million in 2017, a rise of over one million barrels per day.
In February, US oil production surpassed that of Saudi Arabia for the first time in two decades. On the other hand, levels in June and August exceeded Russian production, something unheard of since 1999. With these results, the US now stands as the world’s largest oil producer.
EIA forecasts indicate that the US industry will continue to grow. By 2019, production will average 11.5 barrels per day.
The sudden surge of US oil production
The rise of US oil production began in 2011, with the increase mainly focusing in the regions like western Texas, eastern New Mexico the Gulf of Mexico; North Dakota, and Montana.
Through fracking, the country’s crude output increased by approximately 5 million barrels per day to current levels.
Although this rise decelerated with the 2014 oil price fall, it later stabilized in 2016 and the US maintained its production growth. Investments multiplied and thus production increased.
With global production on the rise, the OPEC and other producers strove to reach an agreement that would promote a price increase. Despite the fact that most industry majors such as Russia and Saudi Arabia joined these efforts, the United States disregarded this deal.
As a consequence, production cuts benefitted the United States. The unmet demand was covered by the world’s first economy. Countries like Spain, Italy, the Netherlands, United Kingdom, and Norway were the perfect destination for the surplus generated by the US industry.
At the time, the OPEC warned of the risks of the US stance. “The rise of US oil production is concerning,” the cartel said in February.
The risk of a new price drop concerned international producers. However, global crude supply significantly fell as Venezuela and Iran drastically lowered production, and thus the market remained stable.
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