US soon to leapfrog Saudi Arabia and Russia to become the world's top oil producer as fracking and other new technology boost output

  • U.S. on track to smash 1970 record and produce 11.8 million barrels of oil a day
  • USSR and Saudi Arabia overtook it in the 1970s and it's been a long way back
  • Breakup of the USSR helped, as did new technology used in the U.S.
  • But Russia and Saudis could easily boost own production to prevent this

The U.S. is on pace to leapfrog both Saudi Arabia and Russia and reclaim the title of the world's biggest oil producer for the first time since the 1970s.

The latest forecast from the U.S. Energy Information Administration predicts U.S. output will grow next year to 11.8 million barrels a day. 

'If the forecast holds, that would make the U.S. the world's leading producer of crude,' Linda Capuano, head of the Energy Department agency, said.

The current U.S. record for a full year is 9.6 million barrels a day in 1970. 

The U.S. is on pace to leapfrog both Saudi Arabia and Russia and reclaim the title of the world's biggest oil producer for the first time since the 1970s 

The U.S. is on pace to leapfrog both Saudi Arabia and Russia and reclaim the title of the world's biggest oil producer for the first time since the 1970s 

However, Saudi Arabia and Russia could upend that forecast by boosting their own production.

In the face of rising global oil prices, members of the OPEC cartel and a few non-members including Russia agreed last month to ease production caps that contributed to the soaring prices.

President Donald Trump urged the Saudis to pump more oil to contain rising prices, tweeting on June 30 that King Salman agreed to boost production 'maybe up to 2,000,000 (two million) barrels'.

The White House later clarified that the king said his country has a reserve of two million barrels a day that could be tapped 'if and when necessary.'

The idea that the U.S. could ever again become the world's top oil producer once seemed preposterous.

The past decade or so saw a revolution in American energy production, led by techniques including hydraulic fracturing, or fracking, and horizontal drilling 

The past decade or so saw a revolution in American energy production, led by techniques including hydraulic fracturing, or fracking, and horizontal drilling 

'A decade ago the only question was how fast would U.S. production go down,' said Daniel Yergin, author of several books about the oil industry including The Prize.

'The rebound of U.S. output 'has made a huge difference. If this had not happened, we would have had a severe shortage of world oil,' he said.

The U.S. led the world in oil production for much of the 20th Century, but the Soviet Union surpassed America in 1974, and Saudi Arabia did the same in 1976, according to Energy Department figures.

By the end of the 1970s the USSR was producing one-third more oil than the U.S.; by the end of the 1980s, Soviet output was nearly double that of the U.S.

But the past decade or so saw a revolution in American energy production, led by techniques including hydraulic fracturing, or fracking, and horizontal drilling.

Those innovations - and the breakup of the Soviet Union - helped the U.S. narrow the gap. 

President Donald Trump urged the Saudis to pump more oil to contain rising prices, tweeting on June 30 that King Salman agreed to boost production 'maybe up to 2,000,000 (two million) barrels' 

President Donald Trump urged the Saudis to pump more oil to contain rising prices, tweeting on June 30 that King Salman agreed to boost production 'maybe up to 2,000,000 (two million) barrels' 

Last year, Russia produced more than 10.3 million barrels a day, Saudi Arabia pumped just under 10 million, and the U.S. came in under 9.4 million barrels a day, according to U.S. government figures.

The U.S. has been pumping more than 10 million barrels a day on average since February, and probably pumped about 10.9 million barrels a day in June, up from 10.8 million in May, the energy agency said on Tuesday.

Capuano's agency forecast U.S. crude output would average 10.8 million barrels a day for all of 2018 and 11.8 million barrels a day in 2019.  

The trend of rising U.S. output prompted Fatih Birol, executive director of the International Energy Agency, to predict this spring that the U.S. would leapfrog Russia and become the world's largest producer by next year - if not sooner.

One potential obstacle for U.S. drillers is a bottleneck of pipeline capacity to ship oil from the Permian Basin of Texas and New Mexico to ports and refineries.

'They are growing the production but they can't get it out of the area fast enough because of pipeline constraints,' said Jim Rittersbusch, a consultant to oil traders.

Venezuelan crude shipments to India also fell 21 percent in the first half of this year as production has been hampered by inadequate investment, mismanagement, and U.S. sanctions 

Venezuelan crude shipments to India also fell 21 percent in the first half of this year as production has been hampered by inadequate investment, mismanagement, and U.S. sanctions 

Some analysts believe that Permian production could decline, or at least grow more slowly, in 2019 or 2020 as energy companies move from their best acreage to more marginal areas.

Exports to India have also surged as sanctions against Iran loom after President Trump pulled out of the nuclear deal.

Last month, India's oil ministry asked refiners to prepare to limit imports of Iranian oil ahead of U.S. sanctions that take effect in November.

Venezuelan crude shipments to India also fell 21 percent in the first half of this year as production has been hampered by inadequate investment, mismanagement, and U.S. sanctions.

As a result, U.S. crude oil exports to India hit a record in June and so far this year are almost double last year's total.