Who Is the Largest Oil Producing Country in the World?
September 17, 2019 Welcome
Despite a very gradual shift to renewables such as solar, wind, and nuclear geothermal, crude oil and petroleum products persist as the world’s most valuable energy source. This source of energy is utilized in everything from transport to industry, heating, and pharmaceuticals.
Crude oil is obtained from geological formations across the world with varying amounts of proven reserves. The largest producers of crude oil collectively account for over 40% of global production. This article will discuss the biggest players in global oil and gas exploration and production.
The World’s Largest Oil Producer
According to the EIA, the United States became the world’s largest producer of crude in 2018, surpassing Saudi Arabia and Russia. This trend was partly due to increased hydraulic fracturing in unconventional oil and gas wells in the country unlocking production of nearly 11 million barrels per day.
Facts About the Biggest Oil Producing Country – The U.S.
The world’s largest oil producer is regarded in the industry as a ‘swing producer’ because its output is largely influenced by oil prices. Below is some pertinent information about the U.S. oil and gas industry:
- The price of West Texas Intermediate (WTI), a light, sweet crude fraction from the U.S. is used as a benchmark for oil trading in North America.
- 95% of all new oil and gas wells in the U.S. are produced using hydraulic fracturing.
- The United States is one of the biggest consumers of oil in the world. According to the EIA, the country consumed 20.5 million bbl/day and a total of 7.5 billion barrels of petroleum products (like diesel fuel, gasoline, heating oil, and jet fuel) in 2018.
- WTI is a blend of several sweet crude fractions from across the country with Cushing, Oklahoma as its main delivery and settlement point.
The World’s Largest Oil Producing Organization
Collectively, the Organization of Petroleum Exporting Countries (OPEC) comprised of 14 member nations can be considered the world’s largest oil producer. As at 2018, OPEC accounted for about 44% of the world’s oil production and almost 80% of proven oil and gas reserves. As a result, the activities of the organization exert a significant influence on the prices of crude globally.
The 14 member nations of OPEC as at 2019 are Saudi Arabia, Nigeria, Algeria, Ecuador, Gabon, Angola, Equatorial Guinea, Libya, Iran, Kuwait, Iraq, Venezuela, and the Republic of Congo. OPEC is headquartered in Austria.
Crude Prices and Its Impact on the Global Economy
Besides water, which is not a traded commodity, crude oil and petroleum products are some of the most essential substances with a tremendous impact on human civilization in the modern age.
For example, gasoline and diesel are used to power internal combustion engines of automobiles and trucks, kerosene (a product of the fractional distillation of crude oil) is used to power aircraft engines, and petrochemical feedstock is used to manufacture plastics. Expectedly, these hydrocarbons have a significant impact on the global economy.
Crude oil prices are highly volatile and determined by forces of demand, supply, and market sentiment. The former is mostly dependent on the volume of the product available in the market (the total of contributions from oil-producing countries) while the latter is impacted by a broad range of factors including geopolitical events, speculation, and activities of OPEC.
In times of oversupply (popularly ‘Oil glut’), major oil and gas stakeholders may strike deals on production cuts to increase and stabilize crude oil prices. Popular crude prices include Brent (Europe), WTI (North America), and WCS (Canada).
Cost Considerations in Oil and Gas Exploitation
Oil and gas resources vary widely across the world, with top oil producers having significantly larger deposits than others. However, larger reserves do not necessarily translate to greater production volumes. One reason is that much of the oil left in the world is trapped in unconventional reservoirs and brownfields. Crude production from these deposits requires significant investment (running into several millions of dollars) and advanced technologies to be economically viable. Thus, exploration and production cost largely determine the volume of output.
Another significant consideration that affects the output of the largest oil-producing countries is the grade of hydrocarbons. Nations like Nigeria having large reserves of sweet crude (oil and gas with low sulfur content) can produce these resources at a lower cost and sell at a higher price than, say, the UAE producing sour crude (having a high percentage of sulfur). The reason for this is that crude oil having higher sulfur content increases the cost of refining.
Crude Oil Production by Country: Top Five
Some of the top oil-producing countries in the world include the USA (17.9 million bbl/day), Saudi Arabia (12.4 million bbl/day), Russia (11.4 million bbl/day), Canada (5.29 million bbl/day), and China (4.8 million bbl/day).
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