The World’s Most Important Oil Consumers And Producers

Following last week’s release of the BP Statistical Review of World Energy 2020, I began to review and analyze the data. Today I take a deeper dive into the numbers on petroleum. Oil accounts for a third of the world’s energy consumption. That is the greatest share for any category of energy. In 2019, the world consumed a record 98.3 million barrels per day (BPD) of oil. This was nearly 1 million BPD higher than consumption in 2018, and marked the 10th consecutive record for global oil consumption.

Over the past 35 years, global oil consumption has risen by 39 million BPD, an average increase of 1.1 million BPD each year. Last year’s rise fell just short of that average.

In recent years, BP has begun to provide more granularity in the Review. In previous years, the oil consumption category included biofuels. Now, they have split biofuels into a separate category, so the consumption numbers above are for just oil and derivatives of natural gas and coal (e.g., synthetic oil).

The U.S. continues to lead all countries in the consumption of oil, but China has had the fastest consumption growth for several years. Below are the Top 10 global consumers of oil for 2019.

Related: Saudi Arabia Eyes Total Dominance In Oil And Gas Oil consumption fell in most developed countries and rose in most developing countries. A notable exception was Germany. Although consumption in OECD countries fell by 0.6% and consumption across Europe was down 0.3%, Germany bucked the trend and saw its consumption grow by 0.9%.

The biggest percentage increase in oil consumption was in Iran, which was the world’s 11th largest consumer. Demand there jumped by 10.0%. Iran was the only country in the world with a double-digit percentage increase in demand.

In contrast, double-digit decreases in oil demand were seen in Iceland (-12.7%), Venezuela (-11.6%), and Pakistan (-10.5%).

BP also expanded the level of detail around oil production statistics. Previously, natural gas liquids, or NGLs, were lumped into oil production. Although some NGLs do end up in the fuel supply, others are feedstock to the petrochemical industry. This year BP reported a new category for oil production that is simply “crude oil and condensate”, which is consistent with the way the Energy Information Administration (EIA) reports U.S. oil production.

Based on the change, U.S. oil production numbers for previous years were revised downward by several million barrels a day. Oil production in 2018, for example, had been reported as 15.3 million BPD. But under the new category, 2018 oil production was reported as 11.0 million BPD.

However, because of the revisions to previous years, U.S. production — which had led Russia and Saudi Arabia for years — dropped below the production of one or both countries for years prior to 2019. Under the new category, in 2019 U.S. oil production was the highest in the world for the first time this century.

$30 Oil Won’t Keep U.S. Shale From Setting Production Record

Despite the low oil prices that brought on by the combination of the coronavirus pandemic’s migration to the United States and the oil price war between Russia and Saudi Arabia, US shale producers will together hit a new record output next month, according to the Energy Information Administration (EIA).

Today, the EIA predicted that OPEC’s shift to maintain its market share will cause global inventories to increase further, and prices to fall further.

And the US shale will do its part to contribute to a global increase.

Oil production in the seven most prolific shale basins will hit a new high of 9.075 million barrels per day in April, an increase of 180,000 barrels per day. The largest increase will come from producers in the Permian basin, adding 38,000 bpd of the 180,000-­­bpd total increase, reaching 4.79 million bpd.

All other basins are expected to see a decrease in oil production next month.

Meanwhile, gas production in those seven plays is expected to decrease, the EIA said, by 188 million cubic feet per day.

Russia and Saudi Arabia are waging an oil price war, with Saudi Arabia ramping up production to more than 12 million bpd, and has booked VLCCs to carry more oil to its customers for next month. Both Russia and Saudi Arabia have insisted that they can comfortably withstand these lower oil prices. Analysts aren’t sure of those optimistic statements, nor that US shale will be able to keep its debt-laden head above water in a sub-$30 WTI environment.

US shale producers are now facing a more direct coronavirus challenge as lawmakers in the States work to shutdown nonessential businesses and activities in an effort to stop the coronavirus from spreading. In Texas, home to part of the Permian basin, schools have been closed and could remain closed for the remainder of the academic year, and Dallas and San Antonio have banned large gatherings.

In New Mexico, housing the other part of the Permian, Governor Grisham ordered state employees to work from home, and called on other businesses to follow this as well.

Other states have closed bars, restaurants and movie theaters, and the California Bay area has ordered residents to remain at home for three weeks.

By Julianne Geiger for Oilprice.com

Venezuela Looks To Play Mediator Between OPEC And Russia

Venezuela is in discussions with OPEC and Russia about the current oil price collapse, Nicolas Maduro said on Thursday at a press conference shown on Twitter, according to Russian news agency TASS.

According to Maduro, Venezuela reached out to its “partners” to take steps toward opening up a new dialogue between OPEC and non-OPEC nations.

Venezuela, an oil-dependent economy that has seen its production drop by half over the last couple of years, has already been dealing with low oil prices, with the price of its Merey falling almost $20 per barrel month on month in February, or 35%, mostly from lower demand in China, according to OPEC’s most recent Monthly Oil Market Report.

It is particularly susceptible to even lower oil prices of today and is motivated to bring the two spatting parties together.

Venezuela continues to suffer under the weight of US sanctions and today, the United States added another subsidiary of Rosneft—TNK Trading International SA (TTI)—for supporting Maduro’s regime, according to a Thursday statement from the US Department of Treasury.  

TTI took over the handling of Venezuela’s oil trade after the US sanctioned another Rosneft subsidiary, Rosneft Trading SA (RTSA) for brokering the sanctioned country’s crude. According to the US Department of Treasury TTI purchased 14 million barrels of crude from PdVSA.

The sanctions block all property and interests in property of TTI that are in the US or in the possession or control of US persons, as well as any entities that are owned, directly or indirectly, 50 percent or more by the designated individuals and entity.

The sanctions will include a wind-down period until May 20, for both RTSA and TTI. The US reiterated its intention of lifting the sanctions “for those who take concrete, meaningful, and verifiable actions to support democratic order in Venezuela.”

The Trump administration has in the past referred to Rosneft Trading as the “gravest violator” of the imposed limits on Maduro as much of the Western world wants him ousted.

By Julianne Geiger for Oilprice.com

Oil Price Collapse Continues As Saudis Push For Record-Breaking Production

Crude collapsed by more than 30 percent under the combined pressure of a no-deal end to the OPEC+ meeting last week and Saudi Arabia’s announcement on Sunday that it would turn the taps on and pump as much oil as it can.

At the time of writing, Brent crude was trading at $31.34 a barrel and West Texas Intermediate was changing hands at $27.44 a barrel and the bottom is anyone’s guess as the Covid-19 outbreak continues to spread globally, fueling panic and growing fears about oil demand.

This weekend, Saudi Arabia first said it would cut its official selling prices for April by between $6 and $8 per barrel, signaling it was now changing its priorities and focusing on preserving its market share.

At the same time, Bloomberg’s Javier Blas and Anthony DiPaola reported that the Kingdom was planning to raise production, going to a record-high of 12 million bpd if it had to, according to unnamed sources in the know. The purpose could be to make Russia and other producers feel the pain that Saudi Arabia is feeling in the price department and convince them to agree to cuts, according to Blas and DiPaola.

However, if this is indeed the Kingdom’s purpose, it may be miscalculated as Russia is less reliant on oil revenues and it also has no ambitious multi-billion-dollar investment programs. And, according to analysts, it wants to hurt U.S. shale.

“Russia has been dropping hints that the real target is the US shale oil producers, because it is fed up with cutting output and just leaving them with space,” analysts from energy consultancy FGE said in a note cited by CNN. “Such an attack may be doomed to failure unless prices remain low for a long time.”

Now that Saudi Arabia has decided to do a U-turn, its impact on shale producers would be pretty quick to manifest: a lot of the industry is already feeling pain from lower prices before the crash, coupled with a growing unease among banks to lend to shale drillers who have billions in pending debt repayments.