Significant increases in U.S. production of crude oil and other liquid fuels and the outlook for further growth have focused attention on the possibility that the United States could soon surpass Saudi Arabia to become the leading global producer, according to research by the U.S. Energy Information Administration.
A higher level of U.S. oil production could significantly boost the U.S. economy, and could also reduce global oil prices through its effect on the global crude oil and product market balances. However, the EIA says regardless of any future crossing of U.S. and Saudi production paths, the timing of which would depend on which particular accounting convention is applied, Saudi Arabia will continue to play a unique and vital role in world oil markets.
According to the EIA, U.S. production growth is only one of several key factors that determine when, or even if, such a milestone might be reached. Saudi Arabia, a member of the Organization of the Petroleum Exporting Countries (OPEC), plays a unique role as the only oil producer with significant spare production capacity. Saudi Arabia operates as the world's main swing producer to balance the global market in response to supply or demand changes.
Because nearly all other OPEC and non-OPEC producers operate at their effective capacity, the EIA says Saudi production levels can move significantly in response to economic fluctuations affecting global oil demand, changes in non-OPEC production capacity outside the United States, and changes in production capacity of OPEC members other than Saudi Arabia. A more detailed discussion of these drivers and their impacts is presented in the EIA's December 19 edition of This Week In Petroleum.