The US is set to lose its spot as world’s top oil producer

The U.S. is all but guaranteed to lose its hard-earned spot as the world’s number one oil producer this year amid the recent price crash, vanishing demand and a plunge in capital investment, energy experts say. That could mean potentially enormous implications for U.S. foreign policy, as administrations have for decades viewed energy security and national security as being inexorably tied.

“If we continue where we are with these low prices, we’ll see a big decline in U.S. oil production. It will no longer be number one,” Dan Yergin, energy expert and vice chairman of IHS Markit, told CNBC’s “Capital Connection” on Monday. The U.S. became the top oil producer globally, surpassing the output of Saudi Arabia and Russia, in 2018 thanks to the shale oil boom.

A world increasingly in lockdown over the coronavirus crisis and the oil price war set off between Saudi Arabia and Russia in early March have brought crude prices down more than 65% year-to-date, with global benchmark Brent crude trading at just $22.78 per barrel and West Texas Intermediate at $20.39 per barrel on Monday morning London time, their lowest levels in nearly two decades.

Saudi Arabia earlier this month slashed its crude prices, reversing course from boosting prices via production cuts to what some analysts call a “scorched earth” strategy, flooding the market with cheap oil in pursuit of greater global market share. Russia has announced it will in turn increase its own production, leading other OPEC allies of Saudi Arabia like the United Arab Emirates to open their taps once the previously-agreed OPEC+ output cut deal expires on April 1.

But the impact of the price war still pales in comparison to the sheer evisceration of demand brought on by a forced economic shutdown in most of the world in an effort to slow the spread of the coronavirus, which has now killed more than 34,000 people and infected more than 730,000.

The US is set to lose its spot as world’s top oil producer — and it ‘doesn’t have a lot of tools’ to do anything about it, CNBC, Mar 30