Global Supply Comparison - 1995 versus 2020

Due to the impact of COVID-19, Global demand for petroleum products has fallen dramatically since mid-March 2020. There are many different sources forecasting this total demand drop. The initial estimates were a decrease of 10 million BOPD (barrels of oil per day). Some of the latest estimates are for a demand drop of 20 to 35 million BOPD, representing a total decrease of 20% to 35%. (2020 demand forecast was approx 100 million BOPD)

There is plenty of focus on the negative impacts of this demand drop. I was curious about the comparison of production rates for countries with a demand this low. For easy math, let's assume that daily oil demand will drop by 30 million BOPD to 70 million BOPD. The last time demand was approx 70 million BOPD was 25 years ago in 1995.

For anyone that doesn't remember 25 years ago, the Dow Jones closed above 5000 for the first time, Toy Story was released, the OJ Simpson trial happened and Jordan returned to basketball. I was a college student at the time and I clearly remember April 1995 because I watched the coverage of the Oklahoma City bombing on CNN. 

Global oil demand or supply is usually not just crude oil but all of the petroleum liquids produced. This includes crude oil, shale oil, heavy oil and NGL (Natural Gas Liquids). It's important to note the differences because in the charts below, the numbers will look different than the numbers normally quoted in media sources.

Figure 1 shows Daily Global Production (all liquids) for 1995 and 2019. The data from the Energy Information Administration (EIA) had Global supply averaging 100.6 million BOPD in 2019 and 70.3 million BOPD in 1995, a 43% increase over the last 25 years.

Figure 1: Daily Global Production (Source: EIA)

When comparing the top 15 producing countries, the US is the largest individual producing country of all liquids. The US has also had the largest impact on global production, adding 10.1 million BOPD to the total supply over the last 25 years. Saudi Arabia is the second largest producing country but only added 2.5 million BOPD to global production in that same time. Russia has added more during this time, adding 5.3 million BOPD to the global supply. 


Between the 1995 and 2019, there are large increases from Iraq and Brazil. The numbers for Iraq are skewed because Iraq was still recovering from the fallout of the invasion of Kuwait and Desert Storm. Brazil's increases are the result of Pre-salt exploration and production.

There have been some significant decreases in production over this time, including a 38% decrease in Mexico (lack of investment), a 40% decrease in Norway (depletion) , a 58% reduction in the UK (depletion), and a 69% decrease in Venezuela (sanctions).

When comparing global oil production, the comparison is usually between OPEC and the rest of the world. Figure 2 shows the OPEC, USA and Russia daily oil production (all liquids). This group represents 61% of the total production in 1995 and 66% of the production in 2019.

Figure 2: Daily Production of OPEC, US and Russia (Source: EIA)

The OPEC Countries produced the most oil in both 1995 and 2019 but still trail the US in total additions to global supply, adding 7.8 million BOPD in this time. 

When discussing US Oil production, the main number is Crude oil production and excludes Natural Gas Liquids. Figure 3 shows the change in Daily US Oil production from 1995 to 2019. In 2019, the US averaged 12.2 million BOPD in crude production and an additional 7.3 million barrels per day in additional petroleum liquids.

Figure 3: US Daily Oil Production by Production Type (Source: EIA)

As Figure 3 shows, US Daily Production slowly decline until 2007. At this point, the impact of unconventional production begins to appear. With the exception of 2016, the US has increased oil production every year. Original production forecasts for 2020 had US production increasing to more than 13 million BOPD (Crude oil) but due to COVID-19 impacts, we should expect a production decline instead.

The EIA allows for a comparison of just crude oil production (it also includes lease condensate production). Figure 4 shows the daily crude oil production by country. In 1995, daily global crude production was 62.4 million BOPD and in 2019, it was 82.3 million BOPD (a 32% increase.)

Figure 4: Daily Global Crude Oil Production (Source: EIA)

On a crude oil basis, the US had the largest increase in production since 1995, adding 5.7 million BOPD (86% increase) to the global supply. Russia was second, adding 4.8 million BOPD (81% increase) to the global supply. Canada has also made significant additions in the last 25 years, increasing production by 144% due to increased production from the Heavy Oil plays in Northern Alberta.

Figure 5 compares OPEC, US and Russia Daily Crude Oil production. As a group, OPEC has added 6.1 million BOPD since 1995, surpassing the crude oil increases of USA and Russia.

Figure 5: Daily Crude Oil Production for OPEC, USA and Russia (Source: EIA)

COVID-19 will have a short term but extremely dramatic impact on global oil demand. Once the quarantine guidelines are lifted, oil demand should return to between 95 and 100 million BOPD. This data shows that OPEC, Russia and the US have been the major contributors to oil production growth since 1995 and will bear the brunt of supply decreases in the short term. OPEC and Russia have taken mild steps at reducing production to slow growth of oil going into storage. US oil production will decline naturally due to low prices and low investment. With decline rates near 40% for unconventional formations, we should expect a significant decrease in US production through 2021.

As with all oil cycles, there will be a high to match the low. While US shale oil production has added low cost oil to the global supply, it has also resulted in a limited international exploration. COVID-19 has resulted in additional cancellations or delays of international projects. At some point within the next 3 or 4 years, the lack of investment in exploration will result in an under supply of oil production and the next boom will begin.