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US crude production record high; Oil Prices may fall hitting Russia, Iran, OPEC and sharpen trade wars

Washington – The US crude oil output is at an all-time high. It was at 11.9 million barrels per day (bpd) in the last week. While it is the highest-ever US crude production in the last four decades, it is expected to hit 13 million bpd by 2020. It would thus deliver a severe blow to countries like Russia and Iran which have economies that mainly depend on crude oil export. Consequently, the US could derive large strategic and political advantage.

In the last decade, the US began large-scale production of crude oil and natural gas using the ‘Shale technology’. After 2014, despite the sharp fall witnessed in the oil sector, the US did not make cuts in its production and yet earned its place in the list of leading nations in the industry. Thereafter, in 2015, the then US administration’s decision to begin crude export turned in its favour, and it is believed to have been a decisive move which led to the boom in this sector.

After assuming office, President Donald Trump decided to lift the restrictions in place on the oil sector. Thereafter, Trump adopted a more aggressive policy for the industry and undertook an ambitious strategy to give a check to Russia and the OPEC nations. To accomplish the objective, the US commenced oil exports on a large-scale to China, leading Asian countries as also to the European nations. Owing to the surge in the exports, the oil industry was enlivened, and the US made significant investments in its production.

It had effects on the oil output resulting in the US crude recording new highs in the last year. At the beginning of 2018, the US crude production was approximated at 10.9 million bpd while the figures have soared to 19 million bpd at the start of 2019. The addition of a whopping 1 million bpd  merely in a year is indicating at the US’s ensuing leap in the sector, according to the US Department of Energy.

In the latest forecast, the US Energy Information Administration (EIA) stated that US oil production would climb to 13 million barrels per day making the country the highest oil producing nation in the world. Moreover, the US has also taken a stride in the natural gas sector along with the crude. In 2018, US produced 82 billion cubic feet per day of natural gas while it is expected to escalate to a 92.2 billion cubic feet per day in 2020, says the EIA.

The increase in US oil production poses a new challenge to the OPEC, an Organization of the Petroleum Exporting Countries, and its allied nations. The OPEC and Russia had together decided to cut oil production from January 2019 in order to ensure higher oil prices and curb its fall. However, the countries did not make the expected profits due to the increase in US oil production. Conversely, these countries are staring at the growing financial crisis looming over them.

Experts and analysts in the field claim the US’s increased oil production and exports to Europe and other nations is a part of a trade war in the oil sector.

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