Americas to Tip Global Oil Balance to Surplus

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--With an expected increase in oil production from the Permian Basin, and with new supplies coming from the likes of Guyana, American supplies are expected to put the global balance in a surplus, various reports find.

The United States is the world's largest crude oil producer. The U.S. Energy Information Administration (EIA), the statistical arm of the Department of Energy, said in its monthly market report for June, published Tuesday, that total U.S. crude oil production should average 13.2 million barrels per day (BBL/d) this year, a 2% increase from year-ago levels.

While operating under voluntary supply constraints, economists at the Organization of the Petroleum Exporting Countries (OPEC) put total production from Saudi Arabia at around 9 million BBL/d by comparison.

The EIA in its June report said it expects total U.S. crude oil production to increase by another 4% by next year to average around 13.7 million BBL/d. If the forecast is accurate, the United States would set a record in terms of oil production for both 2024 and 2025, despite occasional reports suggesting growth could be plateauing.

Federal data show about 80% of total U.S. crude oil production comes from inland basins. Of that, the Permian Basin is expected to account for most of total production growth through December 2025.

The nearby Eagle Ford, along with what's in the U.S. territorial waters of the Gulf of Mexico, account for much of the rest.

In terms of growth, the Permian can expect to see a 5% increase in output next year. That's far lower than the 14% increase year-on-year to 2015, though production volumes in 2025 should be about 5 million BBL/d more than a decade ago.

A separate report from the International Energy Agency (IEA) finds that U.S. production is expected to help the global balance reach a surplus by the end of the decade.

The spare capacity cushion, the IEA said Wednesday, should be "unprecedented." Led by the United States and other producers in the Americas, total supply capacity is expected to be about 8 million BBL/d above the projected global demand level by 2030.

And it's not just the United States. Guyana increased its crude oil production by 98,000 BBL/d between 2020 and 2023, making it the third-fastest growing non-OPEC producing country during that period.

As of early 2024, Guyana's oil output was about 645,000 BBL/d, all from the offshore Stabroek block.

With 168 billion barrels of estimated oil reserves, meanwhile, Canada ranks fourth in the world, behind Iran, Saudi Arabia and Venezuela. Most of that is in Alberta, which reported a record average last year of 3.73 million BBL/d in production.

For the market, crude oil prices are holding in the lower $80 range after OPEC opted to loosen its supply constraints starting later this year. That should only add to the surplus and, assuming demand levels hold steady, could be bearish for crude oil prices and in turn squeeze U.S. production.

"A lower price environment would ultimately challenge the U.S. shale industry, traditionally the fastest respondent to changing market circumstances," the IEA's latest oil report read. "How the industry will adapt and adjust to the new supply landscape will have wide-ranging consequences for producers and consumers globally through the remainder of the decade and beyond."

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