In comments made as tensions with Iran began to relax, US President Donald Trump has claimed that the country is no longer reliant on oil from the Middle East to meet its energy needs.
Some market analysts have disputed this claim, however, positing that the president has overstated the booming US oil production of recent years.
It is certainly true that technological improvements in the shale oil industry have made the US the world’s top oil producer, but the reality is a little more nuanced. On the one hand, the increased production of shale players like ExxonMobil, the oil major that produces the Mobil lubricant brand, has reduced the country’s dependence on imported oil. This partly explains why market reactions to recent supply disruptions have been rather tempered and short-lived.
On the other hand, however, oil is a global commodity, and a major supply disruption in one region has ramifications around the world. What’s more, shale producers cannot ramp up production quickly to meet a global shortfall. The spare capacity lies with OPEC countries, particularly Saudi Arabia. Imported heavy crude is also needed to compliment the very light crude from shale operations if refineries are to operate efficiently.
A former energy adviser to President George W. Bush, Bob McNally, said to CNN:
“If we didn’t need oil from the Middle East, then why on earth did the president feel compelled to reassure the world, just before markets opened, that we were ready to use the SPR [Strategic Petroleum Reserve]?”
