This opinion piece presents the opinions of the author.

It does not necessarily reflect the views of Rigzone.

The world is fascinated by lists and rankings. In the energy world there is a keen interest in knowing who may be the world’s largest producer of oil and gas as well as who might be the world’s largest importer of those fuels. For a long time, those rankings haven’t changed, but new leaders are emerging, signaling that meaningful changes are underway for the global energy business. Will these changes lead to the “resource wars” that some people have worried about? So far, the reality is that the global allocation of natural resources – oil, natural gas, minerals, water, etc. – has shifted without a shot being fired.

Last week, the U.S. Energy Information Administration (EIA) pronounced that China has officially surpassed the United States to become the world’s largest net importer of crude oil. The prospect of this change has been widely anticipated given the dramatic rise in U.S. crude oil production over the past few years due to the success of the American shale and tight oil revolutions. Put into context against trends of global oil markets, the oil market change over the past five years has been nothing short of amazing. Between 2008 and now, global oil use has risen by five million barrels a day (b/d) from 87 million b/d to 92 million b/d. At the same time, OPEC’s output has fallen by two million b/d while Brent oil prices have tumbled by nearly 25% despite the current Middle East political tensions.

The reason world oil demand could climb without the primary providers of crude oil benefiting has been due to the dramatic rise in U.S., and to a lesser degree, Canadian production – both conventional and oil sands. From mid-July 2008 to a week ago, U.S. oil production increased from 5.0 million b/d to 7.6 million b/d, which is largely attributable to increased oil flows from the Bakken shale formation in North Dakota and Montana and from the Eagle Ford and Permian Basin increases in Texas. Over the same period, West Texas Intermediate oil prices declined from $145 per barrel to a recent low of $102 per barrel. Canadian total oil output has increased by roughly half a million barrels a day, for about a 15% increase between mid-2008 and now. Expectations are that North American production gains will continue well into the future on the back of shale and tight oil gains in the U.S. and the shale and oil sands from Canada.

In 1970, the members of the Organization for Economic Co-operation and Development (OECD), the developed economies of the world, consumed 75% of the world’s oil production. Today, that share is below 50%, and likely to fall further given the outlook for faster economic development in the developing economies of the world. This shift, rather than involving military action, has been orchestrated through the market price mechanism. As developing economies have demanded increased oil and gas, prices have been pushed higher causing residents in the developed economies to drive less, use more efficient vehicles and switch to alternative fuels. At the same time, higher oil prices have contributed to the oil shale development that has produced the incremental oil supply that has boosted America’s energy self-sufficiency ratio.

Some people are concerned that with the U.S. becoming the world’s largest oil producer in 2013, as shown by the chart published by the EIA (Exhibit 11 on the next page), Russia may feel pressured to strive to boost its output. When coupled with a return to market some of the oil volumes currently idled due to geopolitical issues within OPEC producers, Russia’s supply could put the world in an over-supply situation causing global oil prices to fall to the $80 a barrel level. An assessment offered by a forecaster at Platts Commodity Week was that there would be no industry impact if prices fell to $80. However, should prices drop to $60 a barrel, producers will react and cut exploration and production spending.

As China assumes the mantle of the world’s largest oil importer, forecasters and political observers are concerned that the energy industry’s balance could be disrupted. China’s hunger for greater oil and gas supplies is pressuring the global community to ensure that market forces can accommodate China’s needs. The natural resource policy of China has been driven by a fear that the global community might act to close off oil and gas supplies that in turn would hinder the country’s economic development. That fear is best demonstrated by episodes such as the U.S. blocking China’s purchase of Unocal in 2005 and then the U.S. barring China from retaining operating control over the Gulf of Mexico assets of Canadian oil company, Nexen Inc. that it purchased in 2013. These episodes reinforce China’s belief that its strategy to control oil and gas and mineral holdings for the country’s benefit around the world requires selective geographic focus.