US to pass Saudi Arabia as top oil exporter

The US can overtake Saudi Arabia as the top oil exporter within five years.

Oil field after US oil production passes Saudi Arabia Source: Bloomberg

The US is poised to overtake Saudi Arabia as the chief exporter of West Texas Intermediate (WTI) oil, according to the International Energy Agency(IEA). This would be the first time the US has exported the most oil since the 1950s.

How did the US become a top oil exporter?

The US is a top oil exporter because of a boom in domestic production of the commodity over the last 10 years. The US exported a record 2.2 million barrels of oil a day in 2018 and is a key exporter of petroleum. The IEA’s executive director, Fatih Birol, predicts that over five years, American oil production will be nine million barrels a day, surpassing Russia and Saudi Arabia.

‘The second wave of the US shale revolution is coming. It will see the United States account for 70% of the rise in global oil production and some 75% of the expansion in [liquefied natural gas] trade over the next five years,’ said Birol in a press release.

Why is the US a chief oil consumer?

Not only is the US producing great amounts of oil, Americans are consuming more oil than any other country in the world. The US consumes the commodity more because of a strong economy and demand for more petrochemicals, like plastics.

‘US oil consumption [growth] last year was about a half-million barrels per day, and as such it was the highest in all the countries around. It was the first time that the United States in the last two decades was the number 1 driver of oil consumption growth,’ said Birol.

Will political concerns affect US oil production?

The US’ potential dominance in exporting oil will also likely come because of Venezuela’s political turmoil. The US could surpass the oil-rich country’s supply if the uncertainty in the nation continues.

‘We are seeing that geopolitical concerns are casting an increasing shadow on the oil markets today and tomorrow,’ said Birol.

Russia and Saudi Arabia are already forming an alliance because of the potential threat to their dominance in the oil market. The nations have joined with other Organisation of Petroleum Exporting Countries (OPEC) to limit oil output to drive up prices. Birol noted that the US leading in exporting oil could lead to more geopolitical implications in the future.

‘This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy,’ said Birol.


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Speculate on commodities

Trade commodity futures, as well as 27 commodity markets with no fixed expiries.

  • Wide range of popular and niche metals, energies and softs
  • Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
  • View continuous charting, backdated for up to five years

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.