https://www.wsj.com/articles/u-s-crude-production-expected-to-surpass-saudi-arabia-in-2018-1516352405

its monthly report says U.S. output will likely top an all-time high

An offshore oil platform is seen in Huntington Beach, Calif. The International Energy Agency said in its monthly report that it expects U.S. oil production to overtake Saudi Arabia’s in 2018.

An offshore oil platform is seen in Huntington Beach, Calif. The International Energy Agency said in its monthly report that it expects U.S. oil production to overtake Saudi Arabia’s in 2018. PHOTO: LUCY NICHOLSON/REUTERS

By Christopher Alessi

Updated Jan. 19, 2018 11:54 a.m. ET

113 COMMENTS

LONDON—Surging U.S. crude oil production this year is expected to surpass output in Saudi Arabia and rival that of Russia, the world’s two largest oil producers, the International Energy Agency said Friday.

Boosted by a resurgent shale industry, U.S. crude production will likely climb above 10 million barrels a day in 2018, which would top the high set in 1970, the agency said in its closely watched monthly oil market report. The IEA raised its outlook for U.S. crude supply this year by 260,000 barrels a day, to a record 10.4 million barrels a day, largely a result of the recent rally in crude prices.

“The stage was set for a strong expansion last year when non-OPEC supply, led by the U.S…pushed up world production,” offsetting output cuts by the Organization of the Petroleum Exporting Countries and other producers, the agency wrote.

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OPEC, Other Producers to Extend Cuts Through 2018

OPEC and 10 producers outside the cartel, including Russia—which produced around 10.9 million barrels a day in 2017—agreed late last year to extend an agreement to hold back crude output by nearly 2% through the end of 2018. The accord was first struck at the end of 2016 with the aim of reining in a global supply glut that has weighed on prices for over three years.

OPEC’s 14 members averaged a compliance rate of 95% with the cuts throughout last year, according to the IEA, falling to 39.2 million barrels a day from a high of 39.6 million barrels a day.

But U.S. production offset around 60% of those cuts, the agency said. With growth of 600,000 barrels a day last year, the U.S. shale industry “beat all expectations,” benefiting from higher oil prices and “cost cuts, stepped up drilling activity and efficiency measures enforced during the downturn,” the IEA added.

The price of Brent crude—the global benchmark—has risen roughly 50% since 2017 lows in June, closing above $70 a barrel this month for the first time in over three years. Crude prices have been buoyed by compliance with the OPEC-led cuts, geopolitical risks to supply, sliding production in Venezuela and temporary pipeline closures.

“The oil market is clearly tightening,” the IEA said, noting a continued decline in global oil inventories.

Commercial petroleum stocks in the Organization for Economic Cooperation and Development—a group of industrialized, oil-consuming nations, including the U.S.—fell for the fourth straight month in November, by 17.9 million barrels, to stand at 90 million barrels above the cartel’s target of the last five-year average.

The IEA left its oil demand growth estimate for 2018 unchanged, at 1.3 million barrels a day, compared with growth of 1.6 million barrels a day last year.

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