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Crisis in the Middle East and Oil Prices

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Crisis in the Middle East and Oil Prices

Crisis in the Middle East & Oil Prices

Unfortunately, unrest in the Middle East has virtually become commonplace. This unrest is echoed throughout the world through economic impact. More specifically, when the world’s highest oil producing region is in turmoil, prices are affected across the world.

Currently, the world is in disarray due to conflicts spread across the Middle East and the rest of the globe. A civil war is looming in Iraq between two religious groups. Rival Libyan militias are battling for control over the nation. Up north, Russia (the highest producer of oil last year) is battling Ukraine and the rest of the western world. All this while airplanes are falling from the sky, school girls are kidnapped in Nigeria, and Israel and Hamas are continuing a bloody war.

Not a very optimistic outlook.

All of these factors are affecting the price of liquid gold. According to a report by Ernst & Young, second quarter oil prices were up, primarily due to geopolitical risk in the Middle East and North Africa.

However, there is a saving grace. America’s southern states are reaping the rewards of an oil boom and are mitigating the global crisis. Last year, the US began to produce more oil than it imported, something that has not been accomplished in nearly twenty years.

Extraction innovation seen in shale oil has caused rejuvenation for the Permian Basin region, located in western Texas and Southeastern New Mexico. The introduction of shale oil technology allows oil production companies to access resources they previously were unable to.

 

Original infographic from: Saxo Markets UK

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The World’s Biggest Oil Producers in 2023

Just three countries accounted for 40% of global oil production last year.

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Donut chart showing the biggest oil producers by country in 2023.

The World’s Biggest Oil Producers in 2023

This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email.

Despite efforts to decarbonize the global economy, oil still remains one of the world’s most important resources. It’s also produced by a fairly limited group of countries, which can be a source of economic and political leverage.

This graphic illustrates global crude oil production in 2023, measured in million barrels per day, sourced from the U.S. Energy Information Administration (EIA).

Three Countries Account for 40% of Global Oil Production

In 2023, the United States, Russia, and Saudi Arabia collectively contributed 32.7 million barrels per day to global oil production.

Oil Production 2023Million barrels per day
🇺🇸 U.S.12.9
🇷🇺 Russia10.1
🇸🇦 Saudi Arabia9.7
🇨🇦 Canada4.6
🇮🇶 Iraq4.3
🇨🇳 China4.2
🇮🇷 Iran3.6
🇧🇷 Brazil3.4
🇦🇪 UAE3.4
🇰🇼 Kuwait2.7
🌍 Other22.8

These three nations have consistently dominated oil production since 1971. The leading position, however, has alternated among them over the past five decades.

In contrast, the combined production of the next three largest producers—Canada, Iraq, and China—reached 13.1 million barrels per day in 2023, just surpassing the production of the United States alone.

In the near term, no country is likely to surpass the record production achieved by the U.S. in 2023, as no other producer has ever reached a daily capacity of 13.0 million barrels. Recently, Saudi Arabia’s state-owned Saudi Aramco scrapped plans to increase production capacity to 13.0 million barrels per day by 2027.

In 2024, analysts forecast that the U.S. will maintain its position as the top oil producer. In fact, according to Macquarie Group, U.S. oil production is expected to achieve a record pace of about 14 million barrels per day by the end of the year.

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