The U.S. Energy Information Agency (EIA) recently reported that its crude oil production in 2019 is expected to increase by 1.18 million barrels from 2018 to 12.26 million barrels a day, surpassing Russia and Saudi Arabia as the largest oil producers. And that number will reach 13.2 million barrels a day by 2020, and even 15 million barrels to 20 million barrels in the future. It is worth mentioning that EIA data show that oil production in the United States is growing much faster than predicted a few months ago.

The rapid increase in U.S. oil production is closely related to the progress of U.S. oil companies and oil extraction technology. On March 5, Chevron, the US oil giant, released information that it planned to produce 600,000 barrels of oil and gas per day in Permian, Texas and New Mexico, by 2020, and 900,000 barrels by the end of 2023, an increase of nearly 40% over the previous expectation of 650,000 barrels per day in the next five years. On the same day, Exxon Mobil, another American oil giant, also announced plans to increase Permian Basin’s oil and gas production by 80% to 1 million barrels a day as early as 2024. By then, the combined daily output of the two companies will be close to 2 million barrels, even higher than that of many OPEC countries.

American oil giants introduced increasingly low-cost shale oil extraction technology to exploit oil fields with full horsepower, which increased crude oil production by 100,000 barrels per day to 12.1 million barrels per day at the end of February, a record one-week high. While significantly increasing shale oil production, the United States further reduced its oil imports, which have now fallen to the lowest level since 1996. Over the same period, U.S. crude oil exports reached an all-time high of 3.67 million barrels per day. This data even broke the record of 32.03 million barrels set in the last week of November 2018.

With the continuous progress of shale oil extraction technology, it is imminent for the United States to change from a net oil importer to a net exporter. EIA predicts that the United States will become a net exporter of energy such as crude oil by 2020. This will also give the United States a greater voice in the international oil market. Michael Lynch, president of the U.S. Energy Economic Strategic Research Consulting Corporation, said that the United States is becoming a dominant energy power in the world. And in the case of a huge increase in oil production, the United States has raised oil exports to the height of reducing the trade deficit.

In trade negotiations with China, the United States hopes that China will increase the amount of energy imported from the United States, including oil, in order to help narrow the huge trade deficit between the United States and China, and partly ease the current tensions in bilateral trade relations. Before the outbreak of Sino-US trade frictions in 2017, China imported crude oil from the United States averaged about 20% of the total U.S. crude oil exports, equivalent to more than 11 million barrels per month. But since July 2018, China has almost stopped importing oil from the United States. However, with the progress of Sino-US trade negotiations, China began to gradually relax its imports of American petroleum products. It is reported that on March 1, an oil tanker carrying U.S. crude oil unloaded at Chinese ports, which is the first time that China has imported crude oil from the United States since the end of November last year. As the world’s largest oil importer, China imported 400 million tons of oil in 2018, and its dependence on foreign countries rose to 69.8%. It is a market that the world’s major oil producers must compete for. I believe the United States will not give up easily.

The shale oil revolution has led to an explosive increase in oil production in the United States. The United States will not only continue to reduce oil imports, but also gradually transform into a net oil exporter. The transformation of the role of the United States has further strengthened the voice of the United States in international oil prices and will reshape the global energy structure. In the past, the world oil market led by Saudi Arabia’s OPEC oil producers and Russia’s non-OPEC oil exporters will present a tripartite situation led by Saudi Arabia, Russia and the United States. From the perspective of triangle as the most stable structure, the fluctuation of international oil market is expected to narrow when oil importing countries reduce their dependence on Middle East oil, which has been in a turbulent situation, and the United States proceeds from the demand of “American priority” and does not want too high or too low oil prices to damage its stable economic development.