US Crude Production Surges to Record High
The United States has achieved a new milestone in its oil production, reaching an all-time high of 13.4 million barrels per day in August. This unprecedented level of output has primarily been driven by increased activity in Texas and New Mexico. This surge complicates matters for OPEC+, a coalition of oil-exporting countries, which intended to increase production beginning in December.
OPEC+ Plans in Jeopardy
OPEC+, led by Saudi Arabia and Russia, had planned to gradually increase output from December onwards. However, the decline in oil prices by 20% since April, coupled with the record production from the US and weakening demand, has led oil traders to believe that OPEC+ may postpone this plan once again.
Impact of Non-OPEC Exporters
The record output from the US is undermining the efforts of OPEC+ to maintain higher prices. Over the past several years, OPEC+ members have curtailed production to bolster market prices, only to be outpaced by rising production from non-OPEC countries.
Projected Global Oil Surplus
Analysts foresee a continued decline in global demand for oil, particularly due to China’s slowing oil consumption. This is anticipated to create a global oil surplus of 1.2 million barrels per day by next year. Expanding production from Brazil, Guyana, and Canada is also expected to contribute to this surplus.
OPEC+ Prospects
Bill Weatherburn, a senior climate and commodities economist at Capital Economics, observes that OPEC+ faces an elusive search for a stable oil market with strong demand and prices exceeding $80 per barrel. He predicts that the organization’s ambitions will remain unfulfilled in 2025 as China’s demand growth remains sluggish and non-OPEC+ producers continue to increase their supply.
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