US ‘to overtake Saudi as top oil producer’
The United States are set to overtake Saudi Arabia as the world’s number two oil producer this year, as shale companies, attracted by rising prices, ramp up drilling, the International Energy Agency said on Jan. 19.
“This year promises to be a record-setting one for the U.S.,” the IEA wrote in its monthly market report.
Crude production of 9.9 million barrels per day (bpd) in the US was now at the highest level in nearly 50 years, “putting it neck-and-neck with Saudi Arabia, the world’s second largest crude producer after Russia,” the IEA said.
“Relentless growth should see the U.S. hit historic highs above 10 million bpd, overtaking Saudi Arabia and rivalling 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.
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.
“U.S. 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 U.S. 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.