US now world’s biggest crude oil producer

The United States has surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer based on preliminary estimates in the United States Energy Information Administration’s Short Term Energy Outlook published yesterday.

According to the US EIA, in February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.

Although EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in its publications, the organisation expects that U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production for the remaining months of 2018 and through 2019, it said in the publication on its website.

“U.S. crude oil production, particularly from light sweet crude oil grades, has rapidly increased since 2011. Much of the recent growth has occurred in areas such as the Permian region in western Texas and eastern New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana,” the agency said.

Meanwhile oil price rallied towards its highest level this year yesterday, after a drop in U.S. crude inventories by 5.3 million barrels last week and as the prospect of the loss of Iranian supply added to concerns about balancing demand and supply.

Brent crude futures rose up 58 cents on Wednesday at $79.64 a barrel and briefly broke above $80. U.S. crude futures rose $1.15, or 1.7 percent, to $70.40 a barrel.

“While we aren’t explicitly forecasting Brent to rise to $100 a barrel, we see real risks of this happening. The fact that much higher supply is already needed from the likes of Saudi Arabia – and the low levels of spare capacity remaining – leave the global system highly vulnerable to any further significant outage,” Gordon Gray, HSBC’s global head of oil and gas equity research to CNBC.

According to the USEIA, the oil price decline in mid-2014 resulted in U.S. producers reducing their costs and temporarily scaling back crude oil production. However, after crude oil prices increased in early 2016, investment and production began increasing later that year. By comparison, Russia and Saudi Arabia have maintained relatively steady crude oil production growth in recent years.

The US EIA estimates are on data from major producing companies, international organizations (such as the International Energy Agency), and industry publications, among others.