OPEC Survival Uncertain Amid U.S. Oil Output Growth

A record surge in U.S. oil production that has moved the country closer to energy independence threatens the existence of OPEC, according to analysts at Citigroup Inc.

“OPEC should find it challenging to survive another 60 years, let alone another decade,” analysts led by Ed Morse, global head of commodities research at Citigroup in New York, said in a report released today. “The United States should see its role in the world as a singular superpower enhanced and prolonged.”

U.S. oil production expanded by a record 790,000 barrels a day last year, according to the Energy Information Administration, the statistical arm of the Energy Department. A shift toward natural gas as a transportation fuel may further undermine the power of the Organization of Petroleum Exporting Countries, Morse said in the report titled “Energy 2020: Independence Day.”

Increased output from Canada and Mexico will accelerate a trend toward North American energy independence, according to the report.

By the middle of 2013, the U.S. Gulf Coast will no longer import light, sweet crude, replacing it with supplies from states such as North Dakota, Oklahoma and Texas. By the end of next year, sour Canadian oil will displace imports from Saudi Arabia, Iraq and Kuwait, according to the report.

The U.S. met 84 percent of its own energy needs in the first 10 months of last year, on pace to be the highest annual rate of self-sufficiency since 1991, according to data from the EIA.

OPEC production fell to the lowest level in a year in January, the Paris-based International Energy Agency said today in its monthly report. The 12-member group pumped 30.34 million barrels a day in January, down 100,000 barrels from December.

To contact the reporter on this story: Asjylyn Loder in New York at aloder@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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