February 28, 2018–U.S. oil production rose to its highest level since 1970 last November, as the U.S. shale oil production continued to boom. The historic increase contrasted sharply with OPEC and Russian oil production, which is holding steady but expected to decease output to increase prices.
U.S. production peaked at 10.057 million barrels a day in November and is expected to average 10.6 million barrels a day in 2018, according to a monthly review by the U.S. Energy Information Administration (EIA). That’s roughly on par with oil production in Saudi Arabia and Russia.
It is noteworthy considering that other oil-producing countries are planning reductions to try to boost prices.
According to The Economist, Saudi Arabia needs oil prices to reach $70-80 a barrel to maintain a steady economy at least until it can diversify its economy into other sectors. As of today, oil prices hovered around $62 per barrel WTI and $65.67 Brent. The Economist asserts that Saudi Arabia and Russia are in talks to invest in each other’s oil businesses and pare back production. The increase in U.S. oil production may complicate that plan.
U.S. Production a ‘Profound Impact’
The United States is on track to become the top oil-producing country by 2019, the International Energy Agency said.
The notable increase in U.S. oil production is having a “profound impact” on global oil trade, according to the IEA. “Through a decline in imports and a surge in exports, US tight oil is now having a similarly profound impact on global crude oil trade,” an IEA World Energy Outlet analysis said.
Meanwhile, demand in Asia is rising, offsetting decreased demand in Europe and North America. Even so, demand is not expected to keep pace with supply, according to the latest estimates by the IEA. “In 2018, fast rising production in non-OPEC countries, led by the US, is likely to grow by more than demand. “
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