The United States this year became the largest crude oil producer, surpassing Russia and Saudi Arabia, according to preliminary estimates from the Energy Information Administration.
Although following the June 22 agreement between OPEC and Russia to up production to rein in prices Russia increased its output by more than 200,000 bpd, the average since the start of the year is higher for the United States, where drillers have evidently taken full advantage of higher prices and relatively low costs.
Earlier this week, in its Short-Term Energy Outlook, the EIA estimated that U.S. crude oil production at 10.9 million bpd in August, an increase of 120,000 bpd from June. Although this was lower than Russia’s 11.21 million bpd for the same month, on average, the U.S. production rate for 2018 so far has been higher, the EIA estimates.
What’s more, the authority said production growth will continue: it has estimated the average for full-2018 will be 10.7 million. That’s a substantial increase on last year’s average of 9.4 million bpd, and production will continue to grow in 2019 as well to 11.5 million bpd.
Conditions are ripe for a further increase in U.S. production. With sanctions against Iran due to enter into effect in November, oil prices will jump higher even though the market has had several months to adjust to the new situation with lower supply. The United States has ensured a cushion of 11 million barrels from the Strategic Petroleum Reserve, and OPEC and Russia have promised they would pump more if it is needed.