Last week OPEC+ decided to defer planned oil production increases in the hope of putting a floor under an oil price that was tumbling towards $US70 a barrel. It hasn’t worked.
The group’s monthly oil market report, published on Tuesday, foresees demand growth of 2.03 million barrels a day this year, a modest reduction from its previous forecast of 2.11 million barrels a day, and a further 1.74 million barrels a day next year . Since 2021, US oil output has soared from 11.3 million barrels a day to about 13 million barrels a day, confirming its relatively recently gained status as the world’s largest oil producer.On the demand side, China has become a major challenge for OPEC+, this year and perhaps well into the future.
. Most forecasters think it will struggle to achieve its targeted growth of “about five per cent” this year and are pencilling in something even lower for 2025. Other industry analysts think the new floor price for oil is around $US70 a barrel, although Bank of America’s analysts think it could average only $US60 a barrel through next year. For the OPEC+ producers, that’s a grim prospect.
Russian oil supply has been trending towards the voluntary ceiling it agreed to as part of the broader OPEC+ voluntary cuts. Under pressure from OPEC to meet its commitments, it is producing a touch over 9 million barrels a day, or about 900,000 barrels a day less than it was before the cuts to OPEC+ production started.