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'Colossal' American oil boom could spoil OPEC's plans

This is the kind of stuff that keeps OPEC up at night.The oil cartel and key ally Russia have spent more than ...

Posted: Feb 13, 2018 2:24 PM
Updated: Feb 13, 2018 2:24 PM

This is the kind of stuff that keeps OPEC up at night.

The oil cartel and key ally Russia have spent more than a year trying to drain the world of excess supply. But the International Energy Agency warned Tuesday that a "colossal" oil boom in the United States could ruin their efforts.

The Paris-based agency said that a massive increase in output means the U.S. will soon be producing more oil than Saudi Arabia. It could soon challenge Russia for the global crown.

The manic American pumping, which the IEA estimates will average 10.4 million barrels a day this year, could cause a glut to return to global markets.

"U.S. producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth," the IEA said in its latest monthly report. "This is a sobering thought for other producers."

Related: U.S. could become world's biggest oil producer in 2018

The IEA said the surge, which is powered by shale, is "reminiscent" of 2014, when booming production in the U.S. prompted OPEC to flood the global market with oil in an attempt to protect its market share.

The strategy led to a price collapse that sent crude to a low of $27 per barrel in 2016 from well over $100.

Plunging prices forced some higher-cost U.S. producers to close up shop. But many emerged leaner and stronger than before.

OPEC and other major producers including Russia agreed to slash their output in late 2016 in order to reduce the glut and help boost prices. The agreement has been extended until the end of 2018.

But there are signs that the strategy may be losing its effectiveness.

Crude prices dropped 10% last week, falling below $60 a barrel for the first time this year. U.S. oil futures were volatile on Tuesday, at points dipping under $59.

Related: Venezuela's oil production is plummeting

The IEA did note two wild cards: The political crisis in Venezuela and a strengthening global economy, both of which could change market dynamics.

"Prices could be maintained at recent levels even as U.S. production rises," the agency said. "If so, most producers will be happy, but if not, history might be repeating itself."

Minnesota Coronavirus Cases

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Cases: 454989

Reported Deaths: 6163
CountyCasesDeaths
Hennepin943781502
Ramsey40624748
Dakota33540354
Anoka31357368
Washington20533237
Stearns18091190
St. Louis13970250
Scott1217799
Wright11791107
Olmsted1078075
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Carver704439
Clay658884
Rice624274
Kandiyohi558072
Blue Earth548033
Crow Wing490478
Otter Tail464268
Chisago459538
Benton423688
Winona394548
Douglas379366
Nobles374647
Mower373729
Goodhue356863
Polk330760
McLeod328147
Beltrami315748
Morrison314545
Lyon305539
Becker288939
Itasca287343
Isanti285643
Carlton284043
Steele278910
Pine270315
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Todd233730
Nicollet229438
Brown218034
Mille Lacs215645
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Cass210724
Meeker201333
Waseca193216
Wabasha17463
Martin171926
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Fillmore12698
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Rock112012
Aitkin111433
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Swift84518
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Marshall70315
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Unassigned47369
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Kittson37420
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Lake of the Woods1961
Cook1160

Iowa Coronavirus Cases

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Cases: 311430

Reported Deaths: 4433
CountyCasesDeaths
Polk46841465
Linn18065279
Scott15872172
Black Hawk14090243
Woodbury13129181
Johnson1230052
Dubuque11625159
Pottawattamie9166115
Dallas908972
Story881038
Cerro Gordo473572
Webster472477
Sioux459757
Warren459339
Clinton458168
Marshall431162
Buena Vista396330
Muscatine396178
Des Moines395143
Plymouth353270
Wapello350798
Jasper332859
Lee324632
Marion309353
Jones274950
Henry267131
Carroll258434
Bremer250148
Crawford234724
Boone222917
Washington222933
Benton213650
Mahaska197937
Jackson195032
Tama190259
Dickinson188829
Kossuth180644
Delaware176236
Clay172521
Wright167124
Fayette166024
Hamilton162330
Buchanan162224
Winneshiek160820
Harrison158562
Hardin157931
Cedar155619
Clayton153849
Butler151724
Page147115
Floyd141636
Cherokee140127
Mills138517
Lyon137533
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Hancock131924
Allamakee130930
Iowa127722
Madison123910
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Jefferson122125
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Shelby105527
Guthrie104424
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Unassigned10160
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Montgomery89124
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Howard85919
Monroe82220
Clarke8129
Pocahontas78211
Ida76030
Davis70321
Greene6977
Adair69620
Monona68518
Lucas66710
Osceola64711
Worth6194
Taylor5999
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Van Buren50215
Decatur4974
Ringgold45111
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