How The Western Hemisphere Became The Driver Of Oil Production Growth

(MENAFN- Baystreet) For decades, the Eastern Hemisphere had been the biggest driver of global oil production growth. Until a decade ago, when the Middle Eastern oil producers – bound by the OPEC cartel – started yielding the growth momentum to the Western Hemisphere with their pursuit of high oil prices and unwittingly helping the first stage of the U.S. shale revolution.
Sure, the Eastern Hemisphere, mostly the Middle East, continues to be the most formidable force in global oil production and markets.
But the Western Hemisphere – led by the United States, Canada, Brazil, and most recently, Guyana – is now the key growth region in oil supply, to the point of partly offsetting OPEC's policies to rein in the cartel's output in the name of“market stability,” or, in other words, higher oil prices.
The growth in oil production in the Western Hemisphere actually captured all the growth in global oil demand in the decade 2012 through 2022, according to statistics data analyzed by Reuters market analyst John Kemp.
Oil production in the Western Hemisphere jumped in one decade to account for 34% of global supply in 2022, compared to 27% in 2012, per Kemp's analysis of the Energy Institute's Statistical Review of World Energy 2023.
The growth from the U.S. and other producers in the Western Hemisphere stood at 8.7 million barrels per day (bpd) in that decade, meeting the entire 8.6 million bpd growth in global consumption, Kemp's analysis showed.
Since 2023, the U.S., Canada, Brazil, and Guyana have continued to see booming production, leading a surge in non-OPEC+ oil supply and frustrating the cartel's efforts to keep oil prices well supported and above $80 a barrel, and preferably higher.
Analysts and forecasters expect those countries, plus Norway, to lead non-OPEC supply growth this year and next.
Booming output in the U.S., Brazil, Canada, and Guyana has more than offset a collapse in production from Venezuela and a decline in Mexico's oil output in the past decade. Offshore Guyana, three already operational Exxon projects are currently producing more than 550,000 bpd of crude oil and are expected to reach more than 600,000 bpd in output later this year.
Non-OPEC liquids production is expected to grow by 1.2 million bpd this year, driven by the U.S., Canada, Guyana, Brazil, and Norway, OPEC said in its Monthly Oil Market Report for February. The forecast for non-OPEC liquids supply growth in 2025 stands at 1.3 million bpd, with the same key growth drivers in the Western Hemisphere.
North America will be leading the expected production growth, and within it, the U.S. is set to see liquids output grow by 540,000 bpd this year and another 600,000 bpd next year. Latin America – led by Brazil and Guyana – is forecast to raise its liquids production by 350,000 bpd in 2024 and by 270,000 bpd in 2025, according to OPEC's estimates.
The Energy Information Administration (EIA) is much more conservative on U.S. output in its latest estimates from its February Short-Term Energy Outlook (STEO).
U.S. oil production fell to 12.6 million bpd in January 2024 because of shut-ins related to cold weather, down from an all-time high of over 13.3 million bpd in December. The EIA expects U.S. oil production will return to almost 13.3 million bpd output in February before decreasing slightly through the middle of 2024. The EIA does not expect U.S. crude oil output to exceed the December 2023 record until February 2025.
Annual U.S. oil production will grow from 12.93 million bpd in 2023 to 13.10 million bpd this year and 13.49 million bpd next year, show the EIA's latest estimates, which were revised down from previous forecasts.
Despite the expected slower growth in U.S. oil production, the Western Hemisphere – including the other key growth drivers Canada, Brazil, and Guyana – is a force to be reckoned with within OPEC+, the organization led by the key Eastern Hemisphere oil producers in the Middle East and Russia.
By Tsvetana Paraskova for Oilprice


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