Industry Insights

Oil and Petroleum Products Explained

The United States is one of the top crude oil producers

The United States became the world’s top crude oil producer in 2018 and maintained the lead position through 2022. U.S. oil refineries obtain crude oil produced in the United States and in other countries. Different types of companies supply crude oil to the world market.

Crude oil is produced in over half of U.S. states

Crude oil is produced in 32 U.S. states and in U.S. coastal waters. In 2022, five states combined accounted for about 72% of total U.S. crude oil production.

The top five crude oil-producing states and their percentage shares of total U.S. crude oil production in 2022 were:

  •  Texas: 42.5%
  •  New Mexico: 13.3%
  •  North Dakota: 8.9%
  •  Colorado: 3.7%
  •  Alaska: 3.7%

In 2022, about 14.5% of U.S. crude oil was produced from wells located in the Federal Offshore Gulf of Mexico and about 0.1% was produced in Federal Offshore Pacific (California).

Although total U.S. crude oil production generally declined between 1985 and 2008, annual production increased nearly each year from 2009 through 2019, reaching a record high in 2019. More cost-effective drilling technology helped to boost production, especially in Texas, New Mexico, North Dakota, Oklahoma, and Colorado. U.S crude oil production declined in 2020 and 2021, mainly because of the effects of the COVID-19 pandemic on the economy. In 2022, production increased about 6% from 2021.

Many countries produce crude oil

In 2022, 98 countries produced about 80.75 million barrels of crude oil, and five of those countries accounted for about 52% of the total.

The top five crude oil producers and their percentage shares of world crude oil production in 2022 were:

  •  United States: 14.7%
  •  Saudi Arabia: 13.2%
  •  Russia: 12.7%
  •  Canada: 5.6%
  •  Iraq: 5.5%

Different types of oil companies supply crude oil

The world oil market is complex. Governments and private companies play various roles in moving crude oil from producers to consumers.

In the United States, companies produce crude oil on private and public land and in offshore waters. Most of these companies are independent producers, and they usually operate only in the United States. The other companies, often referred to as major oil companies, may have hundreds or thousands of employees and operate in many countries. Examples of major U.S. oil companies are Chevron and ExxonMobil.

Three types of companies supply crude oil to the global oil market. Each type of company has different operational strategies and production-related goals.

International oil companies

International oil companies (IOCs), which include ExxonMobil, BP, and Royal Dutch Shell, are entirely investor owned and are primarily interested in increasing value for their shareholders. As a result, IOCs tend to make investment decisions based on economic factors. IOCs typically move quickly to develop and produce the oil resources available to them and sell their output in the global market. Although these producers must follow the laws of the countries in which they produce oil, their decisions are ultimately made in the interest of the company and its shareholders, not in the interest of a government.

National oil companies

National oil companies (NOCs) operate as extensions of a government or a government agency, and they include companies such as Saudi Aramco (Saudi Arabia), Pemex (Mexico), the China National Petroleum Corporation (CNPC), and Petroleos de Venezuela S.A. (PdVSA). NOCs financially support government programs and sometimes provide strategic support. NOCs often provide fuels to their domestic consumers at a lower price than the fuels they provide to the international market. They do not always have the incentive, means, or intention to develop their reserves at the same pace as investor-owned international oil companies. Because of the diverse objectives of their supporting governments, NOCs pursue goals that may not be market oriented. The goals of NOCs often include employing citizens, furthering a government's domestic or foreign policies, generating long-term revenue to pay for government programs, and supplying inexpensive domestic energy. All NOCs that belong to members of OPEC fall into this category.

NOCs with strategic and operational autonomy

These NOCs function as corporate entities and do not operate as extensions of their countries' governments. This category includes Petrobras (Brazil) and Statoil (Norway), among others. These companies often balance profit-oriented concerns and the objectives of their countries with the development of their corporate strategies. Although these companies are driven by commercial concerns, they may also take into account their nations' goals when making investment or other strategic decisions.

OPEC members and Persian Gulf countries have a large share of world oil supplies

OPEC is a group that includes some of the world's most oil-rich countries. OPEC members at the beginning of 2021 held about 72% of the world's total proved crude oil reserves, and in 2022, accounted for about 38% of total world crude oil production. Each OPEC country has at least one NOC, but most also allow IOCs to operate within their borders. In 2022, the seven countries in the Persian Gulf produced about 32% of total world crude oil, and they held about 49% of world proved crude oil reserves at the start of 2021.



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