But it’s not just the U.S. production numbers that are making waves: It’s the spike in U.S. crude oil exports. The U.S. exported 830,000 barrels of crude per day in March, a whopping 64.2 percent increase year over year. In February, it exported 1.1 million barrels per day, a nearly 200 percent increase year over year. According to The Wall Street Journal, the February numbers are closer to the new norm, as it expects the U.S. to export, on average, roughly 1 million barrels per day in 2017.
This is a huge challenge for major oil producers, especially Saudi Arabia and Russia. In December 2016, OPEC and its oil-producing partners agreed to cut production by about 1.8 million barrels per day, or roughly 1.5 percent of global crude production at the time. OPEC, led by the Saudis, has largely made good on this pledge, reducing production by 1.1 million barrels per day in the first quarter of 2017. The Russians have played with the numbers cutting production compared with December 2016 levels but not in year-over-year terms.
This means that even the combined forces of OPEC and non-OPEC producers can’t prop up oil prices unless they are willing to slash production more severely. It also means that there is enough oil on the market, partly from the U.S., to satisfy demand, even when major producers limit their supply. Maintaining prices at current levels is the best outcome these producers can hope for. But even this comes with the downside of losing market share to competitors, without getting oil prices back to the levels that Russia and Saudi Arabia would need to stabilize their economies.