US Oil Production Makes Waves

Oil prices are going down, US oil exports are going up, and the ramifications will be global.

by George Friedman and Jacob L. Shapiro
June 22, 2017

There’s no end in sight to slumping oil prices—good news for consumers but a dire development for major oil producers like Venezuela, Saudi Arabia and Russia. And now, rising US oil production and exports are contributing to the slump.

Oil prices are setting new lows for 2017, with Brent crude dipping below $45 per barrel and West Texas Intermediate dipping below $43. The drop has been attributed to an unexpected increase in US crude inventories, which rose by 3.3 million barrels last week (according to the US Energy Information Administration), despite expectations that it would drop by 3.5 million barrels.

The rise in production is compounded by rising US oil exports, since the US lifted a 40-year ban on these exports in 2015. This led to modest increases in oil exports in 2016 but substantial increases so far in 2017. This is a key reason prices will remain low in the long term.

Ebbs and Flows in US Exports

It is worth remembering why…