Despite the growth of the green economy, oil continues to be a significant and lucrative resource.
Contrary to initial forecasts of decelerated growth, U.S. crude oil production has significantly increased in 2023, further solidifying America’s position as the world’s leading oil producer.
In September 2023, U.S. oil production reached an unprecedented high for any month on record, with projections indicating continued growth in production.
According to a spending survey by Barclays reported by Bloomberg, U.S. oil producers are planning to reduce their spending in 2024 by 1%, with private drillers anticipated to decrease their budgets by an average of 4%.
Despite the projected slight reduction in budgets for the next year, the United States is expected to maintain its production growth, driven by efficiency improvements and the use of longer lateral drilling techniques, as noted by analysts and forecasters. This continued increase in oil production cements the U.S.’s position at the forefront of the world’s top five oil-producing nations, a list that also includes OPEC+ members Saudi Arabia, Russia, Iraq, and another North American producer, Canada.
1. United States
The U.S. has surpassed a production rate of 13 million barrels per day (bpd) of crude oil, setting a record for the highest production level by any country. This trend of increasing production is expected to continue in the short to medium term. The U.S. Energy Information Administration (EIA) reported a monthly high in November, reaching 13.308 million bpd.
Production growth extends beyond the Permian Basin, with other shale areas also showing increased activity, according to Francisco Blanch from BofA, as quoted by Reuters. The U.S. shale industry is focusing on becoming more efficient and providing higher returns to investors, moving away from prioritizing growth alone.
Alongside rising production, U.S. crude oil and petroleum product exports are also increasing significantly, reaching levels comparable to the total production of major oil producers like Saudi Arabia or Russia, as noted by Jim Burkhard of S&P Global Commodity Insights.
Increased production has resulted in a significant rise in U.S. exports of 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, noted that the U.S. is not only producing oil at unprecedented levels but also its exports of oil, including crude, refined products, and natural gas liquids, are approaching the total production volumes of leading producers like Saudi Arabia or Russia. This observation was highlighted in research referenced by Forbes.
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2. Saudi Arabia
Saudi Arabia, leading OPEC and the OPEC+ group, ranks as the world’s second-largest oil producer in 2023. In the first half of 2023, its crude oil production averaged about 10.2 million barrels per day (bpd). However, starting in July, the Kingdom implemented an additional voluntary cut of 1 million bpd, reducing its average production to 9 million bpd in the latter half of the year. This reduction, aimed at stabilizing the market, has been somewhat balanced by increased production from non-OPEC+ countries, including the United States, Brazil, Canada, Guyana, and Norway.
3. Russia
Russia, a principal partner of Saudi Arabia in the OPEC+ alliance, is estimated to be producing approximately 9 million barrels per day (bpd) of crude oil. After it invaded Ukraine, Russia classified its oil production and export data as confidential, stating it would not disclose detailed information about its oil sector to prevent the West from potentially targeting Russia’s oil exports or revenues.
In December 2023, it was reported that Russia agreed to share data on its production, inventories, and fuel output with oil-flow tracking companies and price reporting agencies. This decision came after OPEC+ requested Moscow to enhance transparency regarding its adherence to the production cuts.
During its OPEC+ meeting, Russia announced its plan to further reduce its oil exports by 500,000 barrels per day (bpd) in the first quarter of 2024. The reference levels for this reduction will be based on the export volumes of May and June 2023. This cut will be divided into 300,000 bpd of crude oil and 200,000 bpd of refined products.
4. Canada
As Russia and Saudi Arabia reduce their market supply, North America, including the United States and Canada, has been increasing its oil production. According to the Canada Energy Regulator, Canadian oil production reached a record high of 4.86 million barrels per day (bpd) last year.
Analysts anticipate that Canadian oil output will continue to rise in 2023, 2024, and 2025, driven by increased production at new and existing sites in Alberta’s oil sands. They predict an 8% growth in Canada’s crude oil production by 2025.
5. Iraq
Iraq, OPEC’s second-largest producer, ranks as the fifth biggest oil producer globally this year, with an average output of approximately 4.3 million barrels per day (bpd), according to secondary sources cited in OPEC’s monthly reports.
OPEC’s report for December noted that while the organization’s crude oil production decreased in November for the first time in several months, U.S. oil production continued to achieve new records.
In its report, OPEC highlighted that U.S. crude, condensate production, and natural gas liquids (NGL) output have continued to reach new heights, with total U.S. liquids production hitting a record 21.6 million barrels per day (mb/d) in September, attributed to the strong performance of both onshore and offshore production.
The increase in oil production from countries outside the OPEC+ alliance is expected to challenge the group’s ability to manage oil prices in 2024.
U.S. crude oil production is leading global efforts, hitting record highs in 2023. Despite a slight decrease in spending planned for 2024, technological improvements in drilling are expected to keep U.S. oil production on an upward path. This keeps the U.S. at the forefront of the global oil market, ahead of major producers like Saudi Arabia, Russia, Canada, and Iraq. The increase in U.S. crude oil production is reshaping the global oil scene, challenging OPEC+’s control over oil prices. The U.S.’s significant role in oil production and exports underlines its influence on the global economy, shifting the dynamics of oil supply and demand worldwide.
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Sources:
“Private Shale Drillers Set to Cut Spending After Boom in 2023,” https://www.bnnbloomberg.ca/private-shale-drillers-set-to-cut-spending-after-boom-in-2023-1.2013652
“U.S. Field Production of Crude Oil,” U.S. Energy Information Administration, https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M
“US crude production in September rose to monthly record – EIA,” Reuters, https://www.reuters.com/business/energy/us-crude-production-september-rose-monthly-record-eia-2023-11-30/
“As 2024 Approaches U.S. Leads Global Crude Oil Production,” Forbes, https://www.forbes.com/sites/gauravsharma/2023/12/19/as-2024-approaches-us-leads-global-crude-oil-production-roster/
“Russia Vows to Provide More Oil Data Following OPEC+ Calls for Transparency,” Oil Price, https://oilprice.com/Latest-Energy-News/World-News/Russia-Vows-to-Provide-More-Oil-Data-Following-OPEC-Calls-for-Transparency.html
“Several OPEC+ countries announce additional voluntary cuts to the total of 2.2 million barrels per day,” OPEC, https://www.opec.org/opec_web/en/press_room/7267.htm
“Canada’s Oil Production Set For 8% Rise Over Two Years,” Oil Price, https://oilprice.com/Latest-Energy-News/World-News/Canadas-Oil-Production-Set-For-8-Rise-Over-Two-Years.html
“OPEC Production Falls While U.S. Oil Output Hits New High,” Oil Price, https://oilprice.com/Energy/Crude-Oil/OPEC-Production-Falls-While-US-Oil-Output-Hits-New-High.html
“Monthly Oil Market Report,” OPEC, https://www.opec.org/opec_web/en/publications/338.htm