US to pass Saudi Arabia as top oil exporter

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.