America may well become the world’s leading energy producer by next year, according to the International Energy Agency.
The latest IEA report said that in the 3 months to November last year, U.S. crude output was seen increasing by 846,000 barrels a day.
The data revealed how fast rising production in non-OPEC countries (led by the U.S.) is likely to grow by more than demand this year. The relentless rise of American crude supply could undermine OPEC efforts to re-balance the global oil market, and may see the U.S. overtaking Saudi Arabia and Russia (two of the world’s largest producers) in oil production by the end of 2019.
Head of the oil industry and markets division at the IEA Neil Atkinson said: “We are seeing United States production rising very, very dramatically before our very eyes and that’s likely to continue in 2018.”
One reason this trend looks set to continue may be due to the Trump administration’s willingness to open up more areas in the U.S. to oil production. The U.S. Department of the Interior announced that it may conduct 16 auctions to open new oil and gas wells along the Atlantic and Pacific continental shelves. It will also sell 31 new leases near Alaska and in the Gulf of Mexico.
U.S. energy exports now compete with Middle East oil for buyers in Asia, and daily trading volumes of U.S. oil futures contracts have doubled in the past 10 years, according to the CME Group. This indicates just how much America has grown as a major player in world energy markets.
Conversely, the latest OPEC report showed production for the members of the group was little changed in January as they continued to limit their output for a second year in order to balance an oversupplied market. However, key members like Iraq raised their output in the first month of 2018.
Crude prices have jumped nearly 50 per cent since mid 2017 reaching highs of over $70 a barrel but have since lost steam, now sitting at around $62 p/b.