US shale continues to push Saudi oil out of domestic market

Advancements in drilling and refining techniques in recent years have drastically increased domestic production, and reduced U.S. dependence on foreign oil sources. The record-setting productivity of shale oil is largely to thank, as drills are now able to capitalize on previously unaccessible deposits. As a result, Reuters reports that the current shale boom is increasingly pushing Saudi Arabian oil out of the U.S.

Once the largest oil importer in the world, the rise in U.S. domestic production has turned the country into a net products exporter. The International Energy Agency (IEA) recently projected that U.S. gasoline would soon find its way to new foreign markets. 

"In coming years… U.S. light distillate exports will reach increasingly far-flung markets," the IEA released in a statement. The organization also estimated that Canada and the U.S. will have a a surplus of naphtha and gasoline of around 1.3 million barrels per day by 2019.

As Saudi Aradia has recently cut its own production to keep oil prices hovering close to $100/barrel, the U.S is in the process of expanding two major refineries at Valero and Marathon that will further increase production. This enhanced capability will continue to have Saudi oil sent to markets in Asia, similar to the situation with West African crude in recent years. 

As the U.S. prepares to set new records for  break domestic production, some organizations may find the need for oil and gas strategy consulting to develop the optimal processes for manageable growth. Because the rate of mergers and acquisitions within the industry have been closely linked to production levels, those organizations considering such a move should retain change management consulting early to avoid any losses in productivity.