Greetings everyone! We at Texas Flange hope you’re having a great holiday season. To say the least, 2019 has been a huge year for the oil industry. Over the course of this blog, we will review a few key events concerning geopolitics and its effect on our industry as a whole.
A Rise In Oil & Gas Production
In our January 2019 Blog, we reported news of a record high in United States Oil and Natural Gas Production. ~11.54 million barrels per day (bpd), an amount that we haven’t seen since the 1970s! Back in April, the EIA announced that we hit an astounding 12.2 million bpd! And according to them, there is a very large possibility that we will soon reach 13.39 million bpd, an even larger increase than estimated earlier in the year.
Unrest in Venezuela
Venezuela, one of the founding members of OPEC, has always had a huge influence on the Oil Industry. Today, Venezuela possesses the largest proven oil reserve at 303.2 billion barrels. (Nearly 18% of global reserves). However, due to a misappropriation of funds, Venezuela’s refineries and extraction tools have become antiquated, forcing the country to drop production by 22% over the past five years. (2.1 million bpd).
The situation became dire as the government approached collapse this year. Although the country is attempting to restore stability itself, political unrest within and without the country will likely delay this process even further.
The situation in Venezuela has only inhibited an already weakened oil industry within the country. It was hoped that Saudi Arabia could increase production to make up for the losses caused by the crisis.
The Saudi Aramco Attacks
Those of you who remember the events of September can probably see where this is going… on September 14th of this year, an attack occurred in Saudi Arabia on a Saudi Aramco facility. The attack itself knocked out roughly 5.7 million bpd; about five percent of the global oil supply. Although the Houthi rebels claim responsibility for the attack itself, US Secretary of State Mike Pompeo accused Iran, which rejected the allegations. Regardless of the culprit, it was truly a devastating blow to the global oil supply.
Since then, the facility has been repaired and production was increased to make up for the losses incurred by the attack. The attack caused output to drop to ~8.7 million bpd. Armaco made up for the losses by October with a production of ~9.9 million bpd.
Numerous obstacles still stand in the way of the industry. Disruptions across the world should have made “profit” an unimaginable word to use pertaining to the Oil Industry. The fall of Venezuela should have crippled the industry causing large deficits and forcing us to pull from our reserves, but it didn’t. The attack on Saudi Arabia should have disrupted the market for months, but it didn’t. This year should have been a black mark on the economy, but it wasn’t. This year despite every setback, every disruption, every crippling event, we managed to set a record for production! We couldn’t be more proud of the industry of which we have the privilege to be a part.
We hope this year has been as good to you as it’s been for us, and we can’t wait to work with you again in 2020. Merry Christmas, Happy New Year, and stay tuned for our first blog of the new decade in January.