U.S. to become net petroleum importer again amid oil meltdown
The United States is likely to become a net importer of crude oil and petroleum products later this year, undercutting President Donald Trump's touting of the U.S. as achieving "energy dominance" under his administration.
The new forecast from the Energy Department's independent statistical arm comes as oil prices hover in mid-$20s per barrel, about one-third the price at the beginning of the year. The economic slump from the coronavirus pandemic that has choked off fuel demand and a flood of oil from Saudi Arabia and Russia have driven prices down, which Trump said last week has "ravaged" the U.S. energy sector.
U.S. oil production is expected to decline by 500,000 barrels per day this year from 2019 levels to 11.76 million barrels per day, DOE's Energy Information Administration said in its monthly market update. That estimate is a reversal from its forecast a month ago, when it still expected U.S. production to reach 13 million barrels per day, a new record level that would have kept the U.S. as the leading global producer.
EIA said the U.S. would become a net crude oil importer in the third quarter of the year "because as U.S. crude oil production declines, there will be fewer barrels available for export."
But the EIA's forecast may still be too rosy, since many industry analysts are expecting U.S. production to decline by 3 million barrels per day or more this year as companies tighten spending and idle drilling rigs. Earlier on Tuesday, Exxon Mobil became the latest company to announce cutbacks, saying it would cut its expenditures this year by $10 billion, or about 30 percent of its total, mostly from operations in the Permian Basin of West Texas and New Mexico.
The U.S. has emerged as one of the largest suppliers of oil and refined products such as gasoline and diesel fuel in the global marketplace since the U.S. prohibition on crude exports was lifted in 2015. But crude oil production costs in the U.S. are higher than those in Saudi Arabia and Russia, the two other top producers, and those countries have ramped up their sales to try to win back market share around the globe. Energy ministers from those countries and other members of the Organization of the Petroleum Exporting Countries are scheduled to meet on Thursday to discuss production cuts that Trump has said are expected to top 10 million barrels per day.
However, Moscow and Riyadh have called on the U.S. to also trim its output — which the Energy Department said was already taking place because of the pressure in the free market.
“The private sector and the free market are driving those cuts,” a DOE spokesperson said in a press release.
Energy Secretary Dan Brouillette will also participate on Friday in a virtual G-20 ministerial meeting to discuss global energy markets, the department said.
