The International Energy Agency (IEA) has reported that the United States is currently producing more oil than ever before. This surge in production is a result of higher-than-expected demand and concerns about possible shortages from key oil-producing nations such as Saudi Arabia and Russia.
According to the IEA’s monthly report, global crude oil supply is projected to increase by 1.7 million barrels per day this year, reaching a record high of 101.8 million barrels per day. This growth can be attributed mainly to the booming oil production in the United States, as well as in Brazil and Guyana.
Among the three major oil-producing nations, the United States has experienced the most significant increase in supply, exceeding that of both Russia and Saudi Arabia. The U.S. has seen its supply rise by 1.2 million barrels per day compared to the previous year. In contrast, Saudi Arabia has cut its supply by 1.8 million barrels per day, while Russia has witnessed a decline of 170,000 barrels per day since October of last year.
The IEA expects U.S. output to reach a new record of 19.3 million barrels per day by the end of this year. Although growth is anticipated to slow down in 2024, with a projected increase of only 400,000 barrels per day, this should bring the U.S. close to the milestone of producing 20 million barrels per day.
In addition to increased production, there is also robust demand for crude oil in the United States and China. The IEA predicts that Chinese demand alone will rise by 1.8 million barrels per day this year. In September, China’s daily consumption reached a new record of 17.1 million barrels.
Meanwhile, the United States has seen better-than-expected growth in oil demand, with an increase of 220,000 barrels per day during the third quarter. The IEA anticipates further gains toward the end of the year, projecting that total demand in the U.S. will reach an average of 20.18 million barrels per day.
Overall, the United States is leading global oil production with record-breaking output and strong domestic demand. This has had a significant impact on global supply dynamics, as the U.S. continues to play a crucial role in meeting the world’s energy needs.
Global Oil Demand and Supply Outlook
The International Energy Agency (IEA) has revised its projections for global oil demand growth in 2023, increasing it by 100,000 barrels a day to a total of 2.4 million barrels a day. This adjustment brings the average daily demand to 102 million barrels. However, the IEA anticipates a moderation in both demand and supply next year as global economic growth slows down and interest rates rise.
On the supply side, there is a projected overall increase of 1.6 million barrels a day, bringing the average supply to 103.4 million barrels a day. In contrast, the expected rise in demand for 2024 is 930,000 barrels a day, resulting in an average demand of 102.9 million barrels a day. This indicates a small surplus in the market.
Despite the ongoing conflict in the Middle East, the IEA points out that concerns over supply have eased compared to a month ago. Initially, there were fears that the wider Middle East region could become embroiled in the Israel-Hamas war, potentially impacting the oil supply from that area. However, for now, the fears have subsided as the fighting remains limited to the enclave.
Reflecting this improved outlook, oil prices have followed a similar pattern. Brent crude reached $92.38 on October 19 but pulled back to slightly above $80 per barrel by the end of last week. As of Tuesday, prices were trading at $82.56 a barrel at 0815 GMT.
The IEA emphasizes that the market remains volatile due to heightened geopolitical risks and warns that while a small surplus is expected next year, this situation could change rapidly.