Where would the world be without the extraordinary growth in Russian oil supply, this decade? Not in a good place, actually. Russia’s near 50% oil production increase since the year 2000 did a lot of heavy lifting. And it’s concerning that this very fast growth rate has now topped out.
North American crude oil production (Canada + US + Mexico) saw, during the current decade, its highest levels in 2003 at an annual average of 11.358 Mb/day. The high month of production that year was in September, at 11.450 Mb/day. In that year, 2003, the average price of oil was 31.08. But by 2008, North American crude oil production had fallen to 10.338 Mb/day. Thus, as the price of oil went from 31.08 in 2003 to the 2008 average of 99.67, North American crude oil production lost over a million bbls a day.
Based on data through June of this year, we have currently fallen a bit further, to 10.226 Mb/day. But by cobbling together myriad recent reports from EIA Weeklies, JODI, IEA Paris, and PEMEX reports, it’s likely that we are now slipping below 10 Mb/day.
The North American block highlights what happened to the Non-OPEC block, especially when we take out Russia. And that’s this: the internal structure of Non-OPEC supply essentially peaked early in the decade, in the 2003-2004 period. Only Russia, with its latent supply hangover from the previous recession and financial crisis, was able to burst onto the scene in the 2003-2004 period – thus masking what was happening in the rest of Non-OPEC.
For the past 12 years, Non-OPEC supply has floated between 56.00% and 60.00% of total World supply. But inside of Non-OPEC, it’s been Russia–and only Russia–that’s allowed for Non-OPEC to create its 5 year supply plateau. Indeed, Russia started the decade contributing only 16% of total Non-OPEC supply. But by the production highs of 2008 in OPEC, Non-OPEC, and in World totals, Russia zoomed to provide nearly 23.00% of Non-OPEC supply.
Consider this: without Russia, Non-OPEC oil production would have fallen each year–just as North America fell–steadily into the face of a dramatic price rise in oil from 31.00 to 100.00 (averages). But even with Russia’s extraordinary rescue mission to world supply, Non-OPEC was not able to raise production on a sustained basis after 2004. You can’t raise world production to new highs without Non-OPEC, which currently provides 58% of world supply. And Russia alone cannot get Non-OPEC to new highs.
Total North America, Total Non-OPEC (with Russia), and then OPEC (with Saudi Arabia). In contrast to all the vast detail of global oil supply, the message is really so very simple.