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Today, oil-producing countries are states that actually provide the rest of the world with natural fuel, which is quite deservedly called "black gold". This industry has for many years been considered a key and one of the most profitable. Oil-producing countries boast a developed economy and numerous financial relationships. The world's leading experts even say that the whole world is sitting tightly on the "oil needle". And to some extent, I definitely agree with them.

At the end of 2020, the top 10 largest oil-producing countries look like this:

  • USA - 19.51 million - 19%
  • Saudi Arabia - 11.81 million - 12%
  • Russia - 11.49 million - 11%
  • Canada - 5.50 million - 5%
  • China - 4.89 million - 5%
  • Iraq - 4.74 million - 5%
  • United Arab Emirates - 4.01 million - 4%
  • Brazil - 3.67 million - 4%
  • Iran - 3.19 million - 3%
  • Kuwait - 2.94 million - 3%

oil producing countries

However, these figures are regularly updated due to the geopolitical situation. To make it more comfortable for you to understand this topic, I will first make a short review of the industry itself, which is directly related to the extraction of the main source of fuel.

Oil industry today

It still ranks at the top of the ranking of the most popular industries in the world. The main factor affecting this indicator is the volatility of oil as a financial market instrument. Its value largely depends on the balance of supply and demand.

Also, the cost of the extracted raw materials is significantly influenced by the decisions made by OPEC - the Organization of Petroleum Exporting Countries. Various decisions of a geopolitical nature and even weather conditions do not go unnoticed. The supply of raw materials is constantly regulated by OPEC members. Oil prices are always under strict control. The list of demand factors also includes a direct dependence on the most useful natural resource, the exchange rate of the US national currency and a number of global economic indicators.

The largest oil producers are the countries that provide the extraction of about 71% of the total world volume of this resource.

And this, for a moment, is more than 100 million barrels in just one day. Oil is actively used not only to create transport fuel (diesel and gasoline). It is also the basis from which lubricants, plastics, and various medicines are obtained during distillation.

To date, the most popular oil standards are grades Brent and WTI (West Texas Intermediate). They differ mainly in the places of production and the list of geopolitical factors affecting their cost.

Leading oil producing countries

I will analyze the statistics for the key states from the list I have given above in more detail. Each country that is actively engaged in the extraction of "black gold" has a number of features in its domestic economy, as well as global relations.

  • USA

It produces 19,51 million barrels of oil daily. It occupies a leading position in the TOP-10 since 2017. Production is carried out almost throughout the country (in 32 states), as well as in coastal waters (the lion's share falls on Texas - about 41%). This state is also the largest consumer of this type of fuel raw material. Every day it uses for domestic needs about 4,47 billion oil in just one day.

The main reason for the leadership of the United States in oil production was the use of new drilling methods, in which the country turned out to be a pioneer. Due to the fact that the units can now also work in a horizontal plane, the volume of production in the period from 2018 to 2019 increased by more than 9%.

  • Saudi Arabia

It produces 11,81 million barrels of oil daily. For several years before America began to actively develop in oil production, it was this state that occupied the first line of this list. In terms of consumption, Saudi Arabia is in 6th position (average 3,78 million barrels per day).

When OPEC made a series of cuts, the country was forced to produce 609 thousand barrels of oil per day less. This happened in the period 20-8-2019. But the restrictions didn't end there. In 2020, production decreased by another 3,30 barrels. However, in this case, the cause was the coronavirus pandemic in the world and the imposed restriction on flights. Since the state's GDP is very dependent on oil production (it accounts for about 42%), this trend greatly worries the leadership of Saudi Arabia.

  • Russia

It produces 11,49 million barrels of oil per day every day. Once the Russian Federation was also a generally recognized leader. However, then it was overtaken by the United States and Saudi Arabia. Between 2018 and 2019, oil production grew by only 1%. This is due to the restrictive measures of OPEC. Coronavirus also affected the volume of extracted fuel raw materials. Its reduction was almost 20%.

The main production region in the country is Western Siberia (Smotlor and Priobskoye deposits). According to data received as of June 2020, in terms of the amount of oil consumed, the Russian Federation ranks fifth in the general list (approximately 4% of the world volume).

  • Canada

It produces 5,50 million barrels of oil daily. This state is slowly but surely increasing the production of this type of mineral. Since 2018, it has already risen to 1st line of this list. Experts say that in less than 30 years this oil-producing country will increase the production of fuel raw materials by 120%. And this figure should significantly exceed the growth rate of all other countries that are not members of OPEC. However, all this can hit the state budget hard. After all, most of the oil deposits are in the sand. And here it should be noted that Canada has access to innovative mining technologies, which will certainly reduce potential costs.

In terms of consumption, the state does not depend so much on this type of fuel compared to those who are on the lines above. It needs an average of 2,4 million barrels a day. Moreover, Canada's reserves are quite enough to exist without problems at the same rate of consumption for more than 180 years. In the near future, the country's leadership plans to expand the list of trade agreements.

  • China

It produces 4,89 million barrels of oil daily. It ranks fifth in the top 10 manufacturers. However, it consumes much more. Here, the country stepped up to the second position (about 14 million barrels per day). It was this state that caused such a sharp market reaction to the fall in their demand for oil amid the pandemic.

The lion's share of domestic raw materials is mined in the north-central and north-eastern regions of the country. Production has been gradually declining over several reporting periods. So at the current level of consumption, China's current reserves will last about 5 years.

  • Iraq

It produces 4,74 million barrels of oil daily. OPEC restrictions in 2018-2019 affected this state. But the effect was a little different than in other countries. Production even slightly increased during this period - by 2,6%. Iraq owns approximately 9% of all world oil reserves, which is about 140 billion barrels.

Despite only a modest position in the top 10, the country is the second largest member of OPEC. Iraq occupies the same line in terms of the volume of exported raw materials, which has doubled since 2010 (from 2 to 4 million barrels per day). Moreover, most of the supplies go to Europe, China and India.

  • United Arab Emirates

It produces 4,01 million barrels of oil daily. This state is the third largest among OPEC members. According to 2016 data, it produced more than 4 million barrels per day. But since then, the volume of oil production has begun to decline and by 2017 has already decreased by 3,1%.

To date, the UAE reserves are about 98 billion barrels. Considering their current volume of consumption, the country's reserves will be enough for about 300 years, if not more.

  • Brazil

It produces 3,67 million barrels of oil daily. Against the background of other countries that are also engaged in the extraction of "black gold", the state has increased the pace and demonstrated a positive trend not only in the period from 2018 to 2019, but also in 2020. As of December 2019, production was 3,10 million barrels per day. This indicates an increase of 0,52% compared to the previous month and 15,44% yoy.

Recently, Brazil's exports of this mineral have declined, as in most other oil-producing countries. The current reserves of the state will be enough for about 15 years of consumption.

  • Iran

It produces 3,19 barrels of oil daily. Once upon a time (in the 70s of the last century), this state managed to gain significant control over the oil industry. In those days, the production of raw materials was about 5-6 million barrels per day. But then technology made a breakthrough. An increasing number of countries began to actively develop the deposits located on their territory. All this led to the fact that Iran lost its leadership in this area. Then the United States tightened sanctions against this state. This was followed by an inevitable reduction in production.

As a result, Iran reduced the share of oil revenues in GDP from 29% (in 2019) to only 9% in 2020. However, the country's leadership is still actively investing in oil production. By 2025, it is planned to invest about $500 billion in production.

  • Kuwait

It produces 2,94 million barrels of oil daily. This country is especially strongly attached to the extraction of this mineral. Oil revenues account for nearly half of GDP and more than 90% of export earnings. In 2020, it was planned to significantly increase production. But the pandemic has changed those expectations. Growth has obviously slowed down. Most likely, Kuwait will have to find another lucrative industry to keep its economy healthy.

At the end of 2019, oil consumption in this country amounted to about 339 thousand barrels per day. This indicator has decreased by more than a third compared to the previous reporting period.

How to earn income from oil trading

oil producing countries

This is a highly liquid asset that is very attractive to most investors. You can get access to it through the exchange. Earning income directly depends on the chosen trading strategy, risk appetite and personal preferences of the trader. You can work with oil using asset price speculation, futures contracts and options. A more relaxed tactic involves cash investments in exchange-traded funds (ETF) of the relevant industry sector, as well as shares of oil companies.

Traders who choose long-term prospects prefer futures. Positions can be held without having to pay overnight financing costs. This instrument usually has wide spreads. This is due to the overnight financing fee already included.

Purchasing ETF shares or conventional securities allows you to directly own the underlying asset. In this case, the investor will make a profit only if the prices of previously purchased instruments increase. ETFs help to distribute capital evenly and competently. Some will reflect the value of one particular asset, such as the price of Brent oil. Others use a set of companies associated with this asset as a benchmark index.

If you choose to invest in shares, this will mean the possibility of earning on dividends, as well as profit from the sale of securities in case of their appreciation (growth shares). This usually works in the long run. To start making money on oil, I recommend registering on the forex robot website Abi.

The future of the oil industry

It all depends on three key factors:

  1. the long-term effects of the pandemic;
  2. prospects for countries to use renewable energy sources (for example, solar or wind);
  3. economic growth in China and the United States.

The problems and restrictions that have arisen during the spread of the coronavirus have caused the oil industry to suffer a serious blow, causing uncertainty in the markets. The effect is difficult to predict. But it is obvious that in the long run the consequences will be precisely negative. Economic support measures slightly improve the situation. But the pandemic will certainly have a negative impact on the production and consumption of this fuel in the future.

In addition, the economies of the largest countries can be seriously affected due to GDP growth against the backdrop of changes in oil supply and demand. So far, it is difficult to say what effect the reduction in production will have. But this is sure to have a lasting impact on market volatility and liquidity.

There is an opinion (namely a specific forecast from the EIA) that in the coming years the world will actively develop the use of renewable energy sources. And this should lead to a drop in demand for oil. But so far, the global economy is very dependent on this fuel raw material. Now oil is one of the most valuable resources in the world.

If you're planning to get into oil trading, make sure you're well versed in the field and have a good strategy. And don't forget to check back regularly for updates.

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