US Oil Production at a High
By Simmons Investment Advisors on December 18, 2023
Last month, gasoline prices in the U.S. fell 6%, which is good news for consumers. This is despite the output cuts coming from OPEC+ over the last several months. This seems counterintuitive – shouldn’t gas prices be going up if oil production by OPEC+, which controls roughly 40% of the world’s supply, goes down? The following chart helps explain why this is happening.
The answer lies in U.S. oil production. The United States is the largest oil producer in the world, and recently hit a record of 13.2 million barrels per day. Contrast this with Saudi Arabia, which currently produces approximately nine million barrels per day. The U.S. is actually a net oil exporter in 2023, for the third year in a row. In essence, the growth in U.S. oil production has compensated for the OPEC+ production cuts. This has allowed oil prices to fall back from their recent highs and given the U.S. consumer a welcome break at the gas pump.
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