From Russia with oil
Russia is the third largest oil producer in the world at 11 per cent of global production.
By ATB Economics 11 March 2020 1 min read
Russia and oil have been in the news a lot over the last few days due to the oil price war that has erupted between it and Saudi Arabia.
Saudi Arabia and oil go together like peanut butter and jelly. The TV show “Dallas” (The Owl might be dating itself here) and massive American oil companies such as Chevron and Exxon Mobil cement the connection between the United States and oil. And here in Alberta, we know that Canada is a major oil producer.
Russia, in fact, is the third largest oil producer in the world at 11 per cent of global production* as of 2018. The United States is first at 18 per cent of production followed by Saudi Arabia at 12 per cent.
The Organization of the Petroleum Exporting Countries (OPEC), which includes Saudi Arabia, accounted for 37 per cent of global production in 2018.
Canada is the fourth largest producer at just over 5 per cent of global production. China, also a country not necessarily associated with oil production, is the fifth largest producer.
Ten years ago, before fracking and the shale oil revolution boosted U.S. production, Russia was the second largest producer behind Saudi Arabia.
The 96 per cent rise in U.S. production between 2009 and 2018 is a key reason why Russia broke ranks with its OPEC partners over the weekend. Voluntary supply cuts on the part of OPEC and Russia have been shoring up global oil prices for several years while U.S. production has been enjoying an unfettered renaissance. (Canada’s production, meanwhile, has increased by 62 per cent since 2009.)
One of Russia’s goals seems to be to drive as many U.S. producers out of business as possible before potentially teaming up with Saudia Arabia again down the road.
It’s not clear if Canadian producers are also in Russia’s crosshairs or if they will simply be collateral damage. Either way, the increased supply with which Russia and Saudi Arabia are planning to flood the global oil market will take a toll on Canadian companies.
*Petroleum and other liquids production includes crude oil (including lease condensate), natural gas plant liquids, other liquids, and refinery processing gains.