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Illustration: Rebecca Zisser/Axios

The U.S. has taken the global oil market by storm — becoming the world's largest oil producer in 2018 and on track to surpass Russia and perhaps even Saudi Arabia to become the world's top exporter by 2024.

Why it matters: Thanks to the end of a 40-year-old crude oil export ban signed by President Obama, a shale boom and a host of geopolitical sea changes, the U.S. is poised to reshape the global oil market over the next 10 years and beyond.

The International Energy Agency (IEA) expects the U.S. to account for 70% of the increase in global production capacity in the next 5 years.

  • "Inevitably, the status quo will change," Neil Atkinson, oil markets division head at IEA, tells Axios.
  • "The U.S. is becoming a big player in global oil markets, and it will become a net exporter of oil on average for 2021 for the first time in 75 years. This is a good thing for markets as it adds to consumer choice and flexibility and helps to improve global oil security."

What's happening: The U.S. is exploiting its natural advantages. The type of oil found in the U.S. is lighter and sweeter (contains less sulfur) than oil from other major producers like Canada, Venezuela and Iran. U.S. shale also allows eager investors to get oil fields online quickly rather than taking multiple years to develop.

That's leading investors to push more money towards shale projects, Michael Tran, managing director of global energy strategy at RBC Capital Markets, tells Axios.

  • "As a result what we believe you're on track for is a timeframe where the barrels that are coming to market are becoming lighter and sweeter and ... heavy, sour barrels are becoming increasingly constrained."

Global dynamics also are strongly in the U.S.'s favor.

First, U.S.-led sanctions on Venezuela combined with its state-oil company's slow collapse will see the country with the world's largest oil reserves reduce its already marginalized capacity by almost half over the next year.

  • Iran's production capacity is expected to fall by 1.2 million barrels per day and Nigeria is facing homegrown oil market woes.

Second, the UN's International Maritime Organization next year will bar ships from carrying fuel that contains sulfur content higher than 0.5% and cap their sulfur emissions, benefiting light, sweet crude.

  • Maritime shipping accounts for about 4%–5% of the oil market's 100-million-barrel-per-day total.

Third, developing countries like China, which are driving new demand for crude exports, also are likely to move more toward light, sweet crude as their populations rely less on generators and heating oil, and as construction spending slows down, reducing the need for asphalt — all of which rely on heavy crude oil.

The bottom line: Both market forces and international regulations are pushing global demand towards exactly what the U.S. is selling. Given the booming supply of U.S. oil, that likely means a cap on prices.

Go deeper: A closer look at the U.S. rising oil supply forecast into 2024

Go deeper

Ben Geman, author of Generate
Jan 14, 2021 - Energy & Environment

Oil majors deepen push into offshore wind

Illustration: Eniola Odetunde/Axios

This week brought new signs of multinational oil majors' deepening push into offshore wind.

Driving the news: France's Total is teaming up with Spain-based global power giant Iberdrola to develop what they say will be one of the world's largest offshore wind farms off Denmark's coast.

Mike Allen, author of AM
48 mins ago - Economy & Business

America on borrowed time

Illustration: Aïda Amer/Axios

Economic recovery will not be linear as the world continues to grapple with the uncertainty of the pandemic.

Why it matters: Despite being propped up by an extraordinary amount of fiscal stimulus and support from central banks, the state of the global economy remains fragile.

Scoop: Gina Haspel threatened to resign over plan to install Kash Patel as CIA deputy

CIA Director Gina Haspel. Photo: Win McNamee/Getty Images

CIA Director Gina Haspel threatened to resign in early December after President Trump cooked up a hasty plan to install loyalist Kash Patel, a former aide to Rep. Devin Nunes (R-Calif.), as her deputy, according to three senior administration officials with direct knowledge of the matter.

Why it matters: The revelation stunned national security officials and almost blew up the leadership of the world's most powerful spy agency. Only a series of coincidences — and last minute interventions from Vice President Mike Pence and White House counsel Pat Cipollone — stopped it.

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