This is a concern but let us look at the top 3 crude producers, United States, Russia and Saudi Arabia. Because of the rise in their output, we saw oil prices drop just last week.
Brent crude futures were at $76.02 per barrel at 0016 GMT, down 42 cents, or 0.55 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $67.36 a barrel, down 52 cents, or 0.8 percent, from their last settlement.
Brent and WTI have respectively fallen by 5.5 percent and 7.5 percent from peaks reached earlier in May. The concern has been with these high prices that it can crimp economic growth and stoke inflation.
This is a far cry from the 2016 low of under $30 per barrel. This was a result of Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member Russia who started withholding supplies in 2017 to elevate prices and tighten the market.
Prices have soared since the cuts, with Brent breaking through $80 per barrel earlier this month. Both Saudi Arabia and Russia have said they are discussing raising oil production by 1 million barrels per day (bpd).
“Crude oil prices collapsed after reports emerged that Saudi Arabia and Russia had agreed to increase crude oil production in the second half of the year to make up for losses elsewhere under the production cut agreement,” ANZ bank said on Monday.
Meanwhile, U.S. crude production is increasing as more drillers are expanding their search for new oil fields. Fifteen new oilrigs were added by the end of last week, making the count 859. This is the highest number of rigs since 2015.
In the last two years, the U.S. puts out 10.73 million barrels per day, while Russia pumps 11 million bpd.
U.S. crude production has already surged by more than 27 percent in the last two years, to 10.73 million bpd, bringing its output closer to that of Russia, which pumps around 11 million bpd.
By the looks at these numbers, keeping up with demand should be no problem and prices should be going down at the pumps.
Sonia Rina Davies is a passionate entrepreneur, speaker, author, and personal development coach. She is an outspoken advocate of the free market economy and has helped countless clients identify their core values, envision and realize goals that resonate with those values. She oversees several businesses both online and offline.