The recent drop in oil prices reflects concerns that the unprecedented increase in supply by US
Oil production in the United States reached more than 10 million barrels a day in February for the first time since 1970, according to weekly reports from the Energy Information Administration.
In this regard, the recent drop in oil prices, which is below USD $ 60 a barrel, reflects concerns that the unprecedented increase in supply by US exceeds global demand for this supply.
In addition, the EIA projected that US oil production will increase to an average of 10.6 million bpd in 2018, which would mark the highest average ever recorded for said country. While estimated that this production would continue to rise to a figure of 11.2 million barrels per day by 2019.
The drilling technology has played a crucial role in the use of techniques such as hydraulic fractured rock (fracking), which have opposed various environmental groups. These new drilling and production techniques have enabled the extraction of thousands of millions of barrels of recoverable US oil shale formations in the last 10 years.
Expectations of the Permian Basin of Texas and New Mexico, engine production shale, concentrated almost 30% of production this year.
This US crude production is growing so fast that would be close to surpassing that of Saudi Arabia and Russia. Thus, the US could establish itself as the world 's leading oil supplier.
Therefore, the largest US production may slow the efforts of the Organization of Petroleum Exporting Countries (OPEC) and other non - OPEC countries ,such as Russia, to extend an agreement to cut production to shore up prices of hydrocarbon.
Because of this reordering of the market, as oil exports increase in US, imports fall, reducing dependence on oil exporting nations in the Middle East and other regions.
According to the EIA's figures, exports of US crude increased in the first half of 2017 to 300,000 barrels per day, a 57% increase from the first half of 2016. While, according to this organization, imports of this raw material have decreased by 25% in the past nine years.
Consequently, China has become the second largest buyer of US oil after Canada. And, for the first time, it has begun to have other countries like Lithuania. Thus, the gap between imports and US exports has been shrinking.
Latin American Post | Gexania Umbria
Copy edited by Susana Cicchetto