US oil output is booming and seen outpacing Saudis, Russia
search

US oil output is booming and seen outpacing Saudis, Russia

Crude production in US at highest level in 50 years, putting it ‘neck-and-neck with Saudi Arabia’

This June 27, 2017, file photo shows an oil rig at sunset in Midland, Texas. (Steve Gonzales/Houston Chronicle via AP, File)
This June 27, 2017, file photo shows an oil rig at sunset in Midland, Texas. (Steve Gonzales/Houston Chronicle via AP, File)

PARIS — A global energy agency says that US oil production is booming and is forecast to top that of heavyweights Saudi Arabia and Russia this year.

The International Energy Agency said in its monthly market report released Friday that US oil production, which has already risen to its highest level in nearly 50 years, will push past 10 million barrels a day as higher prices entice more producers to start pumping.

It says that “this year promises to be a record-setting one for the US.”

Meanwhile, global growth in demand for oil is forecast to remain unchanged at 1.3 million barrels a day. That’s mainly due to the impact of higher oil prices and as consumers switch to other types of energy, like natural gas.

US crude production levels put “it neck-and-neck with Saudi Arabia, the world’s second largest crude producer after Russia,” the IEA said.

“Relentless growth should see the US hit historic highs above 10 million bpd, overtaking Saudi Arabia and rivaling Russia during the course of 2018 -– provided OPEC/non-OPEC restraints remain in place,” it said.

A global supply glut pushed oil prices as low as $30 per barrel at the start of 2016.

But producing nations — both inside and outside the OPEC oil cartel — struck a deal at the end of 2016 to cut back production and drive prices higher.

Geopolitical tensions and a reduction in oil stocks have also contributed to the recovery.

Crude recently rose above $70 per barrel for the first time since 2014 after OPEC and non-OPEC countries agreed to extend their combined cutbacks until the end of this year.

Rising prices have, in turn, made it more attractive for shale companies to increase drilling.

And since the United States is not a party to the deal, its shale production can continue uninhibited.

“US growth in 2017 beat all expectations … as the shale industry bounced back, profiting from cost cuts, (and) stepped up drilling activity,” the IEA said.

“Explosive growth in the US and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico,” it said.

“The big 2018 supply story is unfolding fast in the Americas,” the IEA said.

Shale production is controversial, because in order to extract oil and gas, a high-pressure mixture of water, sand and chemicals is blasted deep underground to release hydrocarbons trapped between layers of rock.

And environmentalists argue that the process — known as fracking, or hydraulic fracturing technology — may contaminate ground water and even cause small earthquakes.

Turning to OPEC output, the IEA said that there was “no clear sign yet of OPEC turning up the taps to cool down oil’s rally.”

In its own monthly market report published on Thursday, the Organization of Petroleum Exporting Countries had said that the global oil market was moving closer to reaching a healthy balance between supply and demand.

Join us!
A message from the Editor of Times of Israel
David Horovitz

The Times of Israel covers one of the most complicated, and contentious, parts of the world. Determined to keep readers fully informed and enable them to form and flesh out their own opinions, The Times of Israel has gradually established itself as the leading source of independent and fair-minded journalism on Israel, the region and the Jewish world.

We've achieved this by investing ever-greater resources in our journalism while keeping all of the content on our site free.

Unlike many other news sites, we have not put up a paywall. But we would like to invite readers who can afford to do so, and for whom The Times of Israel has become important, to help support our journalism by joining The Times of Israel Community. Join now and for as little as $6 a month you can both help ensure our ongoing investment in quality journalism, and enjoy special status and benefits as a Times of Israel Community member.

Become a member of The Times of Israel Community
read more:
comments