At the beginning of last week, very interesting statistics appeared that the United States imposed sanctions on a third of the world's oil reserves and a fifth of the production that falls on Iran, Venezuela and Russia.
World oil reserves amount to 1.66 trillion barrels, of which 298.4 billion barrels are in Venezuela, 157.8 billion in Iran, and 80 billion in Russia. If we add up the volume of oil reserves in these countries, their share will be 51% of the top 30 leading countries in terms of reserves and almost 33% of global oil reserves. If Qatar, which left OPEC in 2018 and supports Iran, is included in the sanctions list, then this figure will amount to 34%.
Venezuela suffered the most from sanctions; its daily production decreased by 3.3 times, to 0.75 million barrels. If it produced 2.82 million barrels per day in 2015, it would now be in eighth place. To lesser extent, Iran suffered from US economic constraints, reducing production to 2.1 million barrels. Only Russia managed to increase production from this three - up to 10.7 million barrels per day. Against this background, the US is expanding its markets for raw materials. The US now produces 9.8% more per day than Russia. For comparison, as of October 5, 2019, production in the United States amounted to 11.8 million barrels per day, in Russia - 10.7 million barrels per day. If earlier, about 95% of American oil was bought by Canada, now 25% goes to Europe.
Meanwhile, OPEC may replenish with a new member. Brazilian President Jair Bolsonaru said the country has the potential. Bolsonaru, speaking at the Future Investment Initiative (FII) forum in Riyadh, said that in the next few years, Brazil will become one of the five or six largest oil producers in the world and this will help stabilize oil prices. He added that the country has large oil reserves, more than many operating OPEC member countries.
At the end of the week, almost sensational information came out that the decline in shale drilling in the United States had become so widespread that oilfield services companies took an unprecedented step: they began to dispose of hydraulic fracturing equipment. At present, almost half of the hydraulic fracturing systems are idle. However, this did not bother shale workers before; they simply canned the equipment until better times. But now everything is different, World Oil notes.
Patterson-UTI Energy Inc. and RPC Inc. truck-mounted pumping units and other equipment used to destroy shale rock are decommissioned. It is dismantled for parts or sold for scrap. For hydraulic fracturing, it is necessary to surround the well with several pump trucks and other equipment that pump water, sand and chemicals under high pressure. For this reason, power is measured in horsepower.
According to Scott Gruber, an analyst at Citigroup Inc. about 2.2 million horsepower of capacities, or approximately 10% of all capacities of the industry, will be decommissioned in the near future. Moreover, according to Gruber, Schlumberger and Halliburton will have to eliminate at least another 1 million horsepower in order to balance the hydraulic fracturing market. Estimates of the total fracturing capacity in the United States vary, but Merrill Lynch estimates this figure to be nearly 25 million horsepower. At the same time, according to forecasts of Chase Mulwehill from Bank of America, only 13 million of them will work in the last months of this year compared to 17 million in the second quarter of 2018.
