How Top Crude Oil Producers Impact the Crude Oil Market

The world’s largest producer of crude oil is Russia. It is also among the largest crude oil exporters. The Russian Energy Ministry reported that Russia produced 10.7 MMbpd (million barrels per day) of crude oil in November 2015. For more information, read Russian Crude Oil Production Is through the Roof. Crude oil is at its highest production level since the post-Soviet era. The record production from Russia will continue to weigh on the global oil market.

The second-largest crude oil producer is Saudi Arabia. The OPEC kingpin produced more than ten MMbpd of crude oil in November 2015. The record production will continue to put pressure on the crude oil market.

The consensus of slowing production from the US and Canada could benefit crude oil prices. However, it would be profitable to many companies if oil prices stayed above $50 per barrel. Thus, companies like Devon Energy (DVN), Continental Resources (CLR), and Whiting Petroleum (WLL) would scale up production as prices gain. However, lower drilling costs and better planning is driving the crude oil market at the moment.

Iraq and Iran will continue to scale up production in 2016 in order to capture more market share and offset lower oil prices by producing more. The volatility in the market affects ETFs and stocks like Petrobras (PBR), PetroChina Company (PTR), and Gazprom (OGZPY). ETFs such as the First Trust Energy AlphaDEX ETF (FXN) and the iShares US Oil Equipment & Services ETF (IEZ) are also affected by the ups and downs in oil prices.

The consensus of record production will continue to pressure the global oil market. In the next article, we will analyze the demand side.