Also known as “black gold”, oil has for a long time been seen as an important measure of a country’s riches.
Despite the increasing importance of alternative power sources like solar and wind, global oil production remains a major source of the world’s power. Thus, the world’s top oil producing countries remain major world leaders in the energy industry.
Since the major slump of 2016, oil prices have continued to rebound steadily. They may not have hit the heights of years gone by, but they are clearly on track to maintain modest price levels.
As oil prices have gradually begun looking up again, so too has oil production – an indication of rising investor sentiments.
Difference between oil reserves and oil production
Before discussing the world’s largest oil producing nation, it is important to first differentiate between oil reserves and oil production.
As unlikely as it may seem, the country with the world’s largest oil reserve does not necessarily lead the way in production. This is because there is a major difference between having oil and selling oil. How?
An oil reserve refers to proven oil deposits in the ground. In this regard, Venezuela leads the way as the world’s largest oil reserve nation, boasting a staggering 20.2% (almost 300 billion barrels in oil reserves) of the world’s oil deposits.
The kingdom of Saudi Arabia is not too far behind with 18% (or 260 billion barrels). While countries like Canada (11.8%), Iran (10.6%) and Iraq (9.5%) round up the top 5.
On the other hand, oil production refers to a country’s ability to harvest the oil from deposits in the ground and sell them. Due to political, geological or geographic, technological, and/or economic reasons, having the highest reserves does not always translate into leading the production category.
These factors have created a divide between the top reserve nations and the highest producers.
For instance, Venezuela as the world’s topmost oil reserve country only ranks 14th on the production list.
This is down to the minimal investment in its production capabilities, as well as economic and political barriers to third-party investment in the country’s oil industry.
The geological environment in which this oil is located also makes it incredibly expensive to extract.
Which is the largest oil producing country?
Saudi Arabia is easily cited as the world’s leading oil producing nation, and it has remained among the top 3 oil producing nations for the better part of two decades.
While Saudi Arabia remains a major oil producer – producing about 13.24% of the oil consumed daily in the world, it does not currently rank top for oil production.
According to the US Energy Information Administration, that honor belongs to the United States. The country was able to produce over 15.6 million oil barrels per day (bpd) in 2017, making it the world’s top oil producer.
However, at just above 12 million bpd in 2017, Saudi Arabia was not very far behind.
An interesting fact to keep in mind, though, is that the US ranks just outside the world’s top 10 oil reserve countries, with about 35 billion barrels in proven reserves.
This means it is home to a rather lowly 1.8% of proven reserves. Still, it produced about 13.4% of the world’s total output.
This leaves the USA as arguably the most influential oil producing nation in the world, and further illustrates the divide between reserves and production.
Because of the fluctuation of US oil production levels alongside market prices, it is considered by many to be a swing producer. Despite its low reserve levels, the country is expected to remain a major player in the oil industry for many years to come.
How much oil does the US export?
Considering it ranks as the world’s top oil producing country, you might wonder how much of that oil is used by the US and how much of that is exported.
Interestingly, the USA currently ranks 20th on the list of oil exporting countries – which is again dominated by Saudi Arabia. Indeed, at 51 thousand bpd, the United States current oil exportation numbers are reaching unprecedented levels.
This increase in export has been put down to the recent increase in proven domestic reserves and domestic production.
Why does the US export so little oil while ranking as the top oil producing country? The answer to this question lies in the country’s colossal oil consumption levels.
As of 2017, this consumption level stood at a massive 19.6 million bpd, ranking it as the number one consumer of oil. This figure also means that the 15.6 million bpd produced on average in 2017 failed to cover its consumption levels.
Thus, despite increasing exports, it also remains the leading importer of crude oil (7.8 million bpd).
Leading oil companies in the US
Oil and gas companies typically find themselves in every fiber of the oil and gas sector. This means they engage in everything from prospecting to exploration, extraction, processing and sales.
Incidentally, America’s biggest oil producing company ExxonMobil with a revenue of about 270 billion dollars, ranks among the top 5 oil producing companies in the world.
ExxonMobil is known to produce about 3.9 million barrels of oil per day, which is roughly 3% of the world’s production. It is headquartered in Irving, Texas. Other top oil companies in the US include Chevron, ConocoPhilips, Occidental Petroleum and EOG Resources.
What does the future hold for the leading oil producing countries?
US, Saudi Arabia and Russia are considered relative untouchables atop the oil production charts.
This is due to a combination of their strong domestic demand levels, oil reserves, technological advancements, and primary requirements for oil exports. In reality, little is expected to change in terms of the composition of the top 10 oil producing countries.