Oil prices remain far from the highs they saw in 2008, but have rebounded a great deal since 2016, renewing interest in the sector.
Investor sentiment and prices began to change after an output control deal was made between the Organization of the Petroleum Exporting Countries (OPEC) and 11 of the world’s top oil producers.
The agreement called for oil production to fall by almost 1.8 million barrels a day, and in late 2018, OPEC again decided to cut crude oil production by 1.2 million barrels per day (bpd) in an effort to stabilize prices.
Despite those efforts, increasing oil production in the US and other countries like Brazil and Libya has softened the effect of the cuts and created some price volatility.
Given those circumstances, many investors are curious to know which countries produce the most oil. Read on for a look at the top 10 oil-producing countries in the world in 2018. Statistics are from the Energy Information Administration (EIA) and include total production of petroleum and other liquids.
1. United States
Production: 17,886,000 bpd
Number one on this list of the top 10 oil-producing countries is the US. It produced the most oil in 2018, with output increasing from 15,647,000 bpd in 2017 to 17,886,000 bpd in 2018.
The US has been described as a swing producer because its production fluctuates alongside market prices. The International Energy Agency forecasts that the country will continue to satiate the world’s appetite for oil as demand expands in the next five years.
In addition to being a major oil producer, the US is a big consumer of oil. Last year, the US took in a total of 7.26 billion barrels of petroleum products — that’s an average of about 19.88 million bpd. US President Donald Trump has criticized OPEC’s cuts, saying they have driven oil prices artificially high. He has also instigated sanctions against both Russia and Iran, and pulled the US out of the Iran nuclear deal.
2. Saudi Arabia
Production: 12,419,000 bpd
Saudi Arabia’s output came in at 12,090,000 bpd in 2017, and climbed to 12,419,000 in 2018. The Middle Eastern country possesses 18 percent of the world’s proven petroleum reserves and ranks as the largest exporter of petroleum. Its oil and gas sector accounts for about 50 percent of its GDP, and about 85 percent of its export earnings.
In 2016, Saudi Arabia played a key role in OPEC’s decision to curb oil output, and as noted, prices have improved since then. However, in 2018, the country increased its output by 1 million bpd, causing prices to dip. Saudi Arabia, alongside the US and Russia, attended this year’s G20 summit in Argentina where global energy supply was a topic.
Production: 11,401,000 bpd
Russian oil output has been increasing steadily over the years, growing from 11,210,000 bpd in 2017 to 11,401,000 bpd last year. Despite coming in third on the list, Russia is the world’s largest producer of crude oil and the second largest producer of dry natural gas, according to the EIA. Most of Russia’s reserves are located in West Siberia, between the Ural Mountains and the Central Siberian Plateau, as well as in the Urals-Volga region, extending into the Caspian Sea.
Some believe Russia will be one of the few nations to benefit from US sanctions on Iran. That’s because if Iran toes the line on sanctions, then its oil customers, which include China, France, Turkey and Italy, could turn to Russia for supply. This would not only give Russia an economic boost, but could improve relations between the countries. However, Iran’s current position is to not abide by the sanctions.
Production: 5,295,000 bpd
Next on this list of the top 10 oil-producing countries is Canada. It boosted its annual oil production to 5,295,00 bpd in 2018, surging past 2017’s output levels of 4,964,000 bpd.
Nearly all of Canada’s proven oil reserves are located in Alberta, and according to the province’s government, 97 percent of oil reserves there are in the form of oil sands. Energy exports to the US account for the vast majority of Canada’s total energy exports. However, because of economic and political considerations, Canada is developing ways to diversify its trading partners, especially by expanding ties with emerging markets in Asia.
Canada has been embroiled in a national debate over pipelines. Last year, the federal government purchased the Kinder Morgan Canada (TSX:KML) Trans Mountain pipeline for C$4.5 billion to ensure Canadian crude reaches market ports. The project is estimated to cost another C$7.4 billion to construct, after which the government says it plans to sell the project back to the private sector.
However, there’s no telling if that will occur, because the federal court found that a previous environmental review is insufficient. Now the pipeline is up for review again, with a new environmental impact study due to be released in 2019.
There has also been a longstanding debate over the Keystone XL pipeline, with Trump even issuing a second executive order in April 2019 to try to fast track the expansion of the pipeline, which runs from Alberta to Nebraska.
Production: 4,816,000 bpd
China’s annual oil output decreased in 2017, going down to 4,779,000 bpd from 4,863,000 bpd in 2016. While output was up in 2018 at 4,816,000 bpd, it did not exceed 2016 production numbers. China is the world’s second largest consumer of oil and moved from being the second largest net importer of oil to the largest in 2014.
Of the top 10 oil-producing countries, China is the world’s most populous country and has a rapidly growing economy, factors that have driven its high overall energy demand. China receives much of its oil from Iran, but US sanctions could have a dramatic effect on supply from the Middle Eastern country if Iran follows the rules. China may be forced to find some of its supply elsewhere, or amp up its own production to fill the gap.
Production: 4,616,000 bpd
In 2017, despite increasing its output, Iraq got bumped from sixth place by Iran on the top 10 oil-producing countries list. Output in 2018 helped the nation regain its sixth spot position. The Middle Eastern country marginally increased its oil production from 4,455,000 bpd in 2017 to 4,616,000 bpd in 2018. It holds the world’s fifth largest proven oil reserves at 144 billion barrels; that represents nearly 18 percent of the reserves in the Middle East and almost 9 percent of global reserves.
Production: 4,471,000 bpd
Iran‘s oil output decreased last year, falling from 4,695,000 bpd in 2017 to 4,471,000 bpd in 2018. According to the EIA, Iran holds the world’s fourth largest proven oil reserves and the world’s second largest natural gas reserves. Despite the country’s abundant reserves, Iran’s oil production has substantially fallen in recent years, and natural gas production growth has been slower than expected.
US sanctions and regional disputes have all weighed on Iran’s energy production sector. Global shipping operators such as Maersk Line and Mediterranean Shipping have reportedly made claims that they will be “winding down general cargo shipments, while tanker owners said they plan to move their vessels to other oil-producing countries in the Middle East or West Africa.”
Blocking Iran’s access to crude carriers will have a huge impact on the nation’s oil industry, as well as its largest buyers in Asia. In fact, some predict that this could halve Iran’s daily crude shipments. As a counter, the European Union has launched its own offering to Iran; it hopes to preserve the Iran nuclear deal in exchange for enacting a blocking statute that would allow European companies to do business with Iran during the embargo.
Time will tell how the nation reacts to these developments, but in the meantime, Iran has vowed to break the sanctions and continue selling oil.
8. United Arab Emirates
Production: 3,791,000 bpd
The United Arab Emirates is an OPEC member, and has ranked among the 10 top oil-producing countries for decades. In 2017, it saw a small decrease in production from the previous year’s 3,765,000 bpd; however, it appears that oil output has stabilized and is back up to 3,791,000 bpd.
The country holds the world’s seventh largest proven oil reserves at 97.8 billion barrels, with most of those reserves located in Abu Dhabi. The other six emirates combined account for just 6 percent of the country’s total reserves.
Production: 3,428,000 bpd
Last year, Brazil’s oil production jumped dramatically from 3,363,000 bpd in 2017 to 3,428,000 in 2018.
According to the EIA, total primary energy consumption in Brazil has nearly doubled in the past decade because of sustained economic growth. The largest share of Brazil’s total energy consumption is oil and other liquid fuels, followed by hydroelectricity and natural gas. The recent surge in production and exports is said to be the result of years of large investments by state-run Petróleo Brasileiro (Petrobras); they are said to now be paying off due to higher oil prices. According to Reuters, “the nation hopes to use higher oil sales to help drag its economy out of a two-year recession.”
Production: 2,870,000 bpd
Last on this list of the 10 top oil-producing countries is Kuwait, whose output has dropped two years in a row. In 2016, production reached 3,072,000 bpd, then dropped to 2,825,000 bpd in 2017. Last year, the country made a slight recovery, producing 2,870,000 bpd.
Kuwait’s oil and gas sector accounts for about 60 percent of country’s GDP and about 95 percent of its export revenues.