Amid Saudi-Russia price war, US on track to become net oil importer: Report

The coronavirus and the Saudi-Russia oil price war are contributing to a fall in US oil production and the United States is expected to become a net oil importer again in the fall.

al-monitor The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, Nov. 24, 2019.  Photo by REUTERS/Angus Mordant.

Apr 8, 2020

The United States will soon import more oil than it produces, with production expected to decline by some 500,000 barrels per day in 2020, a government report finds. 

In its report released Tuesday, the US Energy Information Administration says it expects the United States to become a net importer of crude oil and petroleum during the third quarter of 2020. 

"Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export,” the US Department of Energy’s statistical agency says in the report. 

The Energy Information Administration says US crude oil production will likely fall to 11.8 million barrels per day this year, down 500,000 barrels per day from 2019. In 2021, production is expected to drop by 700,000 more barrels per day. 

The Middle East, namely Saudi Arabia, currently produces about a third of the world’s oil. In 2018, about 16% of US petroleum imports came from Persian Gulf countries, and Saudi Arabia was the biggest exporter among them.  

The price of oil has plunged this year due in part to Russia and Saudi Arabia flooding the market with extra supply following the collapse of an OPEC+ deal last month meant to offset the impact of the coronavirus. Brent crude oil prices averaged $32 a barrel in March, the lowest monthly average since January 2016. 

The Energy Information Administration notes its report is “subject to heightened levels of uncertainty” amid the coronavirus threat as well as an upcoming virtual meeting between Russia, Saudi Arabia and other major oil-producing countries Thursday.   

Riyadh and Moscow are trying to hammer out a deal to end their price war that would see output cut by around 10 million barrels per day, The Wall Street Journal reported. In a Tuesday interview, President Donald Trump said he has spoken with the leaders of both countries and believes “it’s all going to work out.”

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