The quick growth of shale production in the United States will soon bump Saudi Arabia from 2nd to 3rd place on the world’s top oil-producing countries list in favor of the US, with Russia as the only country ahead, this according to the International Energy Agency (IEA).
The IEA indicates that Venezuela could lose its number two position in 2018, with that country’s output expected to plunge further amid political and economic turmoil.
The IEA said that Saudi Arabia could soon be overtaken by US crude production representing a return to the period of 2013-2015 when the US-led growth averaged 1.9 million barrels per day.
Some of the factors contributing to US investor interest in oil could be the possible unraveling of the Iran nuclear deal and recent demonstrations there and also disruptions to the industry in Libya. The IEA believes that these factors might have aided the surge in US output.
A fall in the supply of oil from Venezuela dwindled OPEC crude oil output to 32.23 million barrels per day in December. The further drop in Venezuela oil output resulted to the world’s biggest unplanned output fall in 2017.
The IEA added that the production in Venezuela is now about half the level inherited by President Chavez in 1999. December output was 490,000 barrels per day, which is way lower than a year ago with decreases of up to 1.61 million barrels per day.
The agency says it was impossible to say at what rate the decline will continue but what is known is that the decline in Venezuela’s output will surely continue. But if the exports and output of Venezuela sank further, it is fair to assume other producers would perhaps step in with the flexibility to deliver oil in similar quality to that of Venezuela’s shipments to the United States and elsewhere especially China.
The IEA said that the tightening of the market in the concluding months of 2017 was obvious and continued into 2018. In November, OPEC commercial stocks deteriorated for the fourth consecutive month by 17.9 million barrels. A further fall of 42.7 million barrels was envisaged for December as per preliminary data available.