US Could Soon Produce More Crude Than Saudis and Russians

America’s journey to pre-eminence in the global oil trade is about to hit another milestone. By the shale-oil boom, the US is already producing more crude than either Russia or Saudi Arabia, who until recently vied for the top spot. By mid-year America will go one better, Bloomberg reported.

At the moment, Saudi Arabia could raise production all the way up to its maximum capacity of 12 million bpd, surpassing the 11.8 million bpd produced by the US in December, according to the International Energy Agency. Soon even that will not be enough.

American crude output is poised to expand by 1.1 million bpd this year, according to the International Energy Agency, which sees the US exceeding the Saudis’ maximum level within the next six months.

“By the middle of the year, US crude output will probably be more than the capacity of either Saudi Arabia or Russia,” the Paris-based agency said in a report.

That extra magnitude probably will not translate into increased influence over prices, however. As only the Saudis remain willing to hold back production capacity when there is too much oil on the market, the kingdom will retain its unique position as the so-called swing producer.

Global oil demand remains on course to be stronger this year than in 2018 as a boost from lower fuel prices counters slowing economic activity, according to IEA.

Crude prices remain almost 30% below the four-year peak reached in October amid concerns over economic growth in China and the US, the world’s two biggest oil users, who remain locked in a trade dispute.

To prevent markets tipping into oversupply, OPEC and its partners have announced substantial production cuts.

source: Financial Tribune