The International Energy Agency said Thursday the U.S. will bypass Russia in the production of all kinds of liquid fuels on average for the third quarter of this year. Russia would remain the world's second largest crude producer behind Saudi Arabia, with the U.S. a close No. 3.
For decades, amid rising U.S. energy demand and falling domestic crude production, America's influence as a global energy powerhouse waned. That is now changed amid a boom in crude production in places like Texas and North Dakota, where new technologies like hydraulic fracturing and horizontal drilling have accessed once hard-to-reach oil reserves.
U.S. crude production has surged in recent years, helping meet domestic demand, but also providing a blanket of extra oil supply that has helped steady global oil prices. Saudi Oil Minister Ali Naimi acknowledged that new position Thursday, saying at a conference in Seoul that new U.S. production has "increased depth and stability for oil markets."
Alongside its oil fields, North America's refineries and corn fields are also contributing to the continent's energy boom. Washington has long relied on Saudi Arabia to pump more oil on demand each time the world faces significant oil disruptions--a role known in the industry as "swing producer." While the U.S. is expected to rely on crude imports for years to come to meet its still-considerable energy demand, it became a net exporter of oil-products two years ago, for the first time since 1949.
Since then, the U.S. has boosted refined product exports significantly, leveraging flexibility in its refining system to take on a smaller role as global swing producer of fuels in some cases. For instance, data from London-based ship broker Clarksons shows oil-products shipments from the U.S. Gulf Coast to the U.K. rose significantly last month, at a time when European crude supplies from major producer Libya have been strained. The U.S. fuel imports have helped meet demand for refined products and eased crude-demand from European refineries, market watchers said.
Meanwhile, U.S. production of biofuels is also soaring. The IEA said U.S. biofuels production rose by 9% between January and August, reaching 935,000 barrels a day.
The IEA said global oil demand would be about 260,000 barrels a day higher than it had previously expected for this quarter. That puts total demand this year at 90.9 million barrels a day. The IEA also upgraded its forecast for global oil demand growth for next year by 70,000 barrels a day as "the macroeconomic backdrop continues to improve." That means the world's need for oil next year will increase by 1.1 million barrels a day, or 1.2%, to 92 million barrels a day, it forecast.
