US Will Start 2019 as Top Oil Producer as Saudis Cut Output

Russia too will enact modest oil cuts in January. File Image / Pixabay

The worst kept secret about the crude production cutbacks engineered by the Organization of the Petroleum Exporting Countries (OPEC) - that the U.S. will continue to gain market share by pumping all out - was supported indirectly on Tuesday by the Energy Information Administration, which noted that the Americans are expected to end 2018 as the world's top producer.

Output this year was forecast to rise 1.53 million barrels per day (bpd) to 10.88 million bpd, and while this was down from the EIA's previous estimate of a 1.55 million bpd increase, it still beats production in every other country.

As for demand in 2018, it is expected to rise by 520,000 bpd to 20.48 million bpd, the EIA said.

Moreover, the EIA believes U.S. oil production will average 12.06 million bpd in 2019, up 1.18 million bpd from the prior year.

The Americans' remarkable supremacy in the global crude production sector coincides with exports from Saudi Arabia falling in December to about 7.6 million bpd and a projected further decrease of around 7 million bpd in January, according to industry sources.

This was determined by Reuters based on data from Petro-Logistics, which put Saudi oil exports at 8.105 million bpd in November up from 7.491 million bpd in October, and taking into account that the kingdom's shipments next month are set to fall by more than 1 million bpd under the OPEC cutbacks.

Also on Tuesday came word from Alexander Novak, energy minister for Russia, that his country plans to cut its oil output by at least 50,000 to 60,000 bpd in January under the OPEC agreement; this means Russian oil output will be around 11.35 million bpd next month, compared to its post Soviet-record high of 11.41 million bpd in October.

Novak told media the cuts would be gradual: "Everything will depend on technological and climate possibilities; we will get proposals from the companies, [and] "we will see how the situation would evolve."

Given the energy minister's recent comments, it could be that the U.S. may still receive stiff competition in the near future to retain its status as top dog producer: even hours prior to the OPEC meeting that led to the cutback agreement, Novak, who had repeatedly voiced his reluctance to make any production cutbacks, told the press that it would be "much more difficult" for Moscow to cut oil output over the winter because of the cold conditions at Russian oil fields.