United States to overhaul Saudi Arabia as crude oil producer this yr - IEA

Mae Love
January 21, 2018

The United States is expected to take over Saudi Arabia and even rival Russian Federation as the world's leading energy producer, the International Energy Agency said on Friday. It cited increased drilling by shale companies, which have been attracted by rising prices, AFP said.

The International Energy Agency (IEA), in its monthly report, warned that rapid increasing production in the United States could threaten market balancing.

"Relentless growth should see the USA hit historic highs above 10 million barrels a day (in production), overtaking Saudi Arabia and rivaling Russian Federation during the course of 2018 - provided OPEC and non-OPEC restraints remain in place", the Paris-based organization said in the latest monthly report.

The output cuts, combined with geopolitical tensions and a reduction in oil stocks have contributed to a recovery that has seen crude prices rebound to above $70 recently.

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OPEC member states agreed to lower production in 2017 and have made a decision to maintain their output cuts for the whole of 2018 to shore up crude prices and reduce a global supply glut.

According to the IEA, the average of 14 cartel members produced 39.2 million barrels per day, taking into account the decline in production.

"The stage was set for a strong expansion previous year, when non-OPEC supply, led by the United States, returned to growth of 0.7 million barrels a day and pushed up world production despite OPEC and non-OPEC cuts", the agency said.

On Tuesday, the IEA executive director, Dr. Fatih Birol testified before the Senate as he provided the global energy market outlook. The IEA chief highlighted the ability of oil and gas output by the U.S.in 2040 to a level 50 percent higher than other countries. The organization has kept its oil demand growth estimate for 2018 unchanged at 1.3 million bpd, down from 1.6 million bpd in 2017, with total consumption expected at 99.1 million bpd.

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