US oil production is apparently set to hit unprecedented highs in 2018 and overtake OPEC. According to the International Energy Agency (IEA), 2018 is going to set records for US oil production. It is set to overtake the oil production of Russia and Saudi Arabia. US shale oil is an important factor in this.
The IEA, based in Paris, has forecast US oil production at over 10 million barrels a day, overtaking Saudi Arabia and equaling even Russia with a proviso. That is that production restraints applied by OPEC and non-OPEC countries remain unchanged. Should such oil production curbs be removed, then there is likely no possibility of US oil producers reaching anywhere near the potential capacity of Russia or the Middle East.
Brent Crude Futures
Brent Crude futures reached a high of $70.37 a barrel Monday falling to $68.67 Friday. The production of the US shale oil producers will have a bearing on the future capacity of US oil producers, although this is not new. There are many different players in oil production, and the US shale oil industry is one for which future production is yet unknown.
The recent increase in oil prices is sure to prompt US oil producers, traditional and shale, to increase production to take advantage of the higher prices. The IEA expects US oil production to increase in line with increasing prices. This is more likely be shale oil than crude oil.
US Shale Oil Industry Assisted by OPEC Policy
According to Neil Atkinson, who heads up the oil industry and markets division of the IEA, the oil industry is currently fluent because of its ‘dynamism’ and innovation. The number of companies currently involved in the oil industry is also a significant factor in future prices.
OPEC and a number of other allied oil producers began to cut back on the output of oil in January 2017. This was done in an attempt to drive oil prices upward. This cut in production is intended by OPEC to run through 2018. Its intention is to keep prices up while enabling countries to leak their excess stocks into the market. This is not a policy that suits US traditional oil producers, but it sure suits US shale oil companies.
US Oil Production At Highest Level for 50 Years
US oil production currently stands at its highest level for 50 years: around 9.9 million barrels a day. This places the US equal second with Saudi Arabia behind Russia. The US oil and gas boom is due to one major factor: shale oil. Washington not only believes that shale oil could cut the reliance of the US on foreign crude but also could enable the country to export oil worldwide. Time will tell whether this is feasible or not.
