Not so long ago, the Organization of the Petroleum Exporting Countries (OPEC) spearheaded by Saudi Arabia, accounted for 60% of the total crude oil volume traded internationally. But as it cuts oil production in a bid to prop up crude prices, the organization's global clout appears to be slipping away.
Earlier this week, the International Energy Agency (IEA) said the global market share of OPEC+, a select group of OPEC and Russia-led non-OPEC oil producers, was just over 50%; the organization's lowest since 2016. At first glance, much of this decline may be attributed to OPEC+'s own moves this year largely underpinned by Saudi Arabia's production cuts.
However, it is not as straightforward as this. With OPEC in retreat, the IEA has not only highlighted incremental U.S. crude barrels on the market but also massive production upticks in Brazil and Guyana. Additionally, OPEC member Iran's production has also hit a five-year high given Tehran is currently exempt from the organization's quota restrictions.
Rising crude market star Guyana may be on a roll with an over threefold increase in production to 385,000 barrels per day (bpd), but the physical crude market is monitoring developments in the U.S. and Brazil more closely.
Starting with the latter, Brazil's output is up by 400,000 barrels per day (bpd) to 3.6 million bpd. Meanwhile, the U.S. continues to pump around 20 million bpd. Overall, despite warnings of an economic slowdown and a high interest rate climate, the IEA expects the U.S. register a supply increase of 1.4 million bpd.
However, the Paris-based think-tank does expect non-OPEC+ supply growth "to lose momentum in 2024." Whether that happens or not, desperate attempts by OPEC+ to support the oil prices - currently down by 20% since October (at 15:13 EST on December 15, 2023) - have certainly and unwittingly helped rivals in a tough climate too.
Of course, it would be foolish to assume OPEC's influence is waning. As it proudly notes that 79.5% of the world's proven oil reserves are located in OPEC member countries, with the bulk of OPEC oil reserves in the Middle East, amounting to 67.2% of the organization's total.
But in a cyclical industry, recent trading years offer ample testimony of non-OPEC producers being pretty deft at grabbing market share both in good times and bad. It is highly likely that 2024 will be no different, more so with crude oil supply tipped to outstrip demand by many.
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December 18, 2023 at 03:17AM
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Bounce In U.S. Production And OPEC Cuts Reshaping Oil Market Landscape - Forbes
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