22/12/2023
Contrary to previous predictions of a slowdown, the United States has seen a notable increase in its crude oil output this year, solidifying its position as the world’s leading oil producer. Remarkably, oil production in the U.S. reached an all-time high in September and is projected to continue its upward trend. American oil companies plan to reduce their spending by 1% in 2024, with private sector drillers decreasing their budgets by about 4%, according to a Barclays spending survey reported by Bloomberg. Even with marginally reduced budgets for the upcoming year, the U.S. is poised for continued production growth, driven by advancements in efficiency and the extension of oil wells, as noted by industry analysts and forecasters. This recent boost in oil production cements the U.S.’s position at the forefront of the top five oil-producing countries globally, a group that also includes OPEC+ members Saudi Arabia, Russia, Iraq, and fellow North American producer, Canada.
The United States is now producing over 13 million barrels of crude oil per day, a record-breaking figure unmatched by any other country. This output is on a trajectory for further growth in both the short and medium term. In September, U.S. crude oil production hit a new monthly record of 13.236 million barrels per day, as per the latest data from the U.S. Energy Information Administration (EIA). “The increase isn’t limited to the Permian Basin.
We’re witnessing a resurgence in several shale areas that were previously level,” Francisco Blanch, Head of Global Commodities and Derivatives Research at Bank of America, commented in a discussion about the bank’s energy outlook, as reported by Reuters. The U.S. shale sector is shifting its focus to maximizing efficiency and capital, moving away from aggressive expansion to a more balanced approach of growth with improved investor returns.
The EIA predicts that U.S. crude oil production will average 12.93 million barrels per day this year, with an expected increase to 13.11 million barrels per day in the following year. The surge in production is also leading to increased exports of U.S. crude oil and petroleum products. Jim Burkhard, Vice President and Head of Research for Oil Markets, Energy, and Mobility at S&P Global Commodity Insights, observed, “The U.S. is not only producing more oil than any other country historically, but its exports of oil and related products are nearing the total output of either Saudi Arabia or Russia,” as cited in a Forbes report.
As the leader of OPEC and the OPEC+ group, Saudi Arabia has maintained its position as the world’s second-largest oil producer this year. The country’s crude oil production averaged about 10.2 million barrels per day in the first half of 2023. However, since July, Saudi Arabia has implemented an additional voluntary production cut of 1 million barrels per day, bringing its average production down to 9 million barrels per day in the latter half of the year.Â
This reduction, aimed at stabilizing the market, has been somewhat offset by increased production from non-OPEC+ countries, notably the United States, but also Brazil, Canada, Guyana, and Norway.
Russia, a key partner of Saudi Arabia in the OPEC+ alliance, is estimated to be producing around 9 million barrels per day of crude oil. Following its invasion of Ukraine, Russia made its oil production and export data confidential, stating that detailed information about its oil sector would not be disclosed to prevent potential use by Western countries in targeting Russia’s oil exports and revenues.
Earlier in the month, reports indicated that Russia agreed to provide data on its production, stockpiles, and fuel output to oil-flow tracking companies and price reporting agencies after OPEC+ requested greater transparency from Moscow in adherence to the cuts. At the most recent OPEC+ meeting, Russia announced it would intensify its export reduction to 500,000 barrels per day in the first quarter of 2024, based on export levels from May and June 2023. This cut comprises 300,000 barrels per day of crude and 200,000 barrels per day of refined products.
While Russia and Saudi Arabia have been trimming their market supply, North American production has been on the rise, thanks to both the United States and Canada. Canadian oil production reached a record high of 4.86 million barrels per day last year, as reported by the Canada Energy Regulator.
Analysts are forecasting increased output in 2023, 2024, and 2025 as companies boost production in new and expanded sites within Alberta’s oil sands. Canada’s crude oil output is expected to see an 8% increase by 2025.
Iraq, OPEC’s second-largest producer, ranks as the fifth-largest oil-producing country globally this year. Its production has averaged around 4.3 million barrels per day, according to OPEC’s secondary sources in its monthly reports. The most recent report for December highlighted that while OPEC’s crude oil production dipped in November for the first time in several months, U.S. oil production continued to set new records.
OPEC’s report emphasized that “U.S. crude, condensate, and NGL production are continually reaching new heights, with total U.S. liquid output hitting a record 21.6 million barrels per day in September due to the consistent overperformance of both onshore and offshore production.”
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