The International Energy Agency (IEA) announced in its latest report that oil production from the OPEC+ oil cartel countries represents only 51% of the world oil market. This is the lowest figure since 2016, the year the cartel was founded.
IEA report confirms that OPEC+ influence on the oil market is waning. The agency points out that while the oil cartel is cutting production in hopes of keeping oil prices high, the United States is increasing production. Additionally, the oil market is feeling the effects of the slowdown in the global economy due to rising interest rates and weak demand for oil, the Financial Times reports.
OPEC+ is an association that includes the OPEC countries plus Russia, Azerbaijan and Mexico. Although the cartel hoped that cutting oil production would help raise oil prices, market prices for crude oil have so far fallen below $75 a barrel, down from $100 a barrel in September.
According to the IEA, global oil demand in the fourth quarter of this year will remain 400,000 barrels per day lower than forecast in November. In total, oil demand is expected to increase by just 1.9 million barrels per day compared to a year ago. Previously, the IEA had predicted that the growth indicator would be 2.3 million barrels per day. Also in the third quarter, demand increased by 2.8 million barrels per day compared to a year ago, so demand growth is declining.
OPEC+ countries’ market share could decline further as other countries’ oil production volumes are expected to grow more than total global demand next year. Oil production in other countries is expected to increase by 1.2 million barrels per day, while demand is expected to increase by only 1.1 million barrels per day.
The agency’s report highlights that the United States’ position as the world’s largest oil producer will be further strengthened. The United States produces 20 million barrels of oil per day, while daily global oil demand is approximately 100 million barrels. Other countries increasing production are Brazil and Guyana.
“Increasing production growth and slowing demand growth are complicating major producers’ attempts to protect their market share and keep oil prices high,” the report said.
Oil demand is growing less than expected due to weaker demand in Europe, the Middle East and Russia due to weak economies in these regions.
At the same time, oil demand in the United States is growing, and its growth could accelerate further if the Federal Reserve begins to lower interest rates in the coming months.
2023-12-15 07:41:00
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