Oil output climbs to record high in Middle East while production declines in US

Oil output in the Middle East climbed to a record-high while it slumped in the United States, according to a report published by the International Energy Agency. This, is turn, creates concern for fall in international energy prices.

Middle Eastern output exceeded 31 million barrels a day for a third month in June amid near-record supply from Saudi Arabia, while US oil production slid 140,000 barrels a day to 12.45 million, the Paris-based agency said in its monthly market report.

Oil has recovered more than 70 percent from the 12-year low reached in January as Saudi Arabia’s strategy to pressure OPEC’s rivals succeeded in reversing the US shale oil boom. Elevated output from the Middle East pushed the region’s share of world supplies to 35 percent, the highest since the late 1970s, Bloomberg reported, citing the IEA.

In the US, crude production retreated by 220,000 barrels a day to 8.9 million a day in April, the biggest drop since 2008 as the two-year price slump depressed investment and drilling activity, the IEA said. Further, output from all countries outside OPEC will tumble by 900,000 barrels a day this year, the biggest drop since 1992, before recovering by 200,000 barrels a day in 2017, the agency predicted.

"When US shale production was moving upwards very fast it became fashionable to talk of lower reliance on traditional suppliers," the IEA remarked.

However, the agency raised estimates for global oil demand this year and next by 100,000 barrels a day amid resilient fuel consumption in Europe. The world growth rate for 2017 remains unchanged, with demand seen rising 1.3 percent to 97.4 million barrels a day.

Meanwhile, oil inventories in industrialized nations climbed to an all-time high of more than 3 billion barrels in May, while the volume of crude being hoarded on tankers at sea has reached the highest level since 2009, the IEA estimated.