US briefly overtakes Saudi Arabia as top oil exporter due to shale boom

JBC Energy predicts Brent will rise closer to $70 per barrel

All eyes will be on the group’s meeting next week after crude prices slumped to a one-year low below $46 a barrel in New York. AP

The US is expected to overtake Saudi Arabia as the world’s top oil exporter after briefly overtaking the producer in June, according to the latest monthly report from the International Energy Agency (IEA).

“The installation of the necessary pipelines and terminals [in the US] is continuing apace, which will ensure that the trend continues,” the IEA said.

US production is expected to top 13 million barrels per day (bpd) by the end of 2019 and climb as high as 13.5 million bpd in 2020, deputy secretary of the US department of energy Dan Brouillette said, citing figures from the Energy Information Administration earlier this week.

“We are experiencing a tremendous energy renaissance and production numbers continue to climb. Our production numbers are exceeding even some of the world’s wildest expectations,” he said during a media round table.

The new report from the IEA comes as Opec and its allies including Russia are cutting production by 1.2 million bpd in an effort to rebalance oil markets and boost prices. The deal, which came into effect on January 1 this year, will continue until at least the end of March 2020.

Iraq and Nigeria, which are producing above their quota, also agreed to reduce output to comply with the production cut agreement.

“A reminder to the producers that competition for market share is getting tougher comes from preliminary data showing that in June the US momentarily overtook Saudi Arabia and Russia as the world’s number one gross oil exporter,” IEA said.

However, the kingdom reclaimed the top spot in July and August, as US production was affected by hurricane disruptions. The US trade dispute with China has also made it more difficult for shale shipments to find markets.

“While the relentless stock builds we have seen since early 2018 have halted, this is temporary. Soon, the Opec+ producers will once again see surging non-Opec oil production with the implied market balance returning to a signifcant surplus and placing pressure on prices. The challenge of market management remains a daunting one well into 2020."

In the report, IEA maintained its estimate for growth in global oil demand during 2019 at 1.1 million bpd and 1.3 million bpd for 2020.

Separately, JBC Energy, an oil and gas research firm predicted Brent to rise closer to $70 per barrel at some point soon, rather than collapsing to $50 per barrel or below.

“The market will undoubtedly be subject to certain volatilities in the coming months on the back of the IMO switch, with high demand for specific crude grades translating into periodic upside for Brent outright prices,” JBC said.

The International Maritime Organisation will enforce regulations to cap sulphur content in bunker fuel from 2020 onwards.