Tuesday, 22 December 2015

US Overtakes Russia As World’s Largest Producer Of Crude Oil

The United States is now the world’s largest oil and natural gas liquids exporter and would remain so for a while, overtaking both Saudi Arabia and Russia.

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries with daily output exceeding 11 million barrels during the first 5 months of this year.

According to the International Energy Agency (IEA), the shale oil boom due to hydraulic fracturing and directional drilling has resulted in large volume gains in U.S. oil production on private and state lands where federal policies have little effect on output.

The US Congress had on Friday approved the lifting of the ban as part of a $1.1trillion spending bill. The bill was later signed by President Barack Obama.

President Barrack Obama had during his last visit to Kenya sometime in July this year stated categorically that his country would no longer buy Nigeria’s crude oil thus heightening the call by the Organised Private Sector (OPS) that the country should intensify efforts to develop the non- sector of the economy.

The US until then was buying almost 10 per cent of Nigeria’s total crude oil stock, but now buys a small amount of Nigerian crude oil due to the dramatic rise in domestic shale production.

With the lift on the ban of US’s crude export, Nigeria has lost its biggest customer bringing the fortunes of its crude differential trading to the lowest in the last ten years.

Oil analysts believe that Africa-US oil trade could completely stop in the next two to three years as other leading exporters, including Angola, Libya and Algeria, suffer the same fate as Nigeria. If that materialises, Africa will have to find new customers for its oil, going head-to-head with Middle East producers in the key Asian market.

Added to this are several other African countries such as Ghana, Cote d’Ivoire, South Sudan, Equatorial Guinea, Ethiopia and Kenya, among many others, that have made commercial oil discoveries or are in the process of doing so.

What this portends is that some years down the line, the crude oil market would turn from a sellers’ market to a buyers’ market, as the likelihood of an oil glut forces prices down.

Analysts argued that the reality of the US slamming the door firmly against Nigeria’s oil exports could be the wake-up call she needs. Nigeria, without doubt, has enormous natural and human resources that could still be tapped to stem her over-reliance on hydrocarbon exports.

Following the latest development, there strong indications that the US would saturate the global oil market with oil hence bringing Saudi Arabia and other OPEC member countries to their knees.

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