Monday , September 26 2022

Oil centers replace OPEC



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Three countries currently account for almost 40% of global oil production, and only one of these countries is a member of the Organization of Petroleum Exporting Countries. The three are Russia, the United States and Saudi Arabia, and as their influence on oil markets grows with the rise in production rates, OPEC will decline at least temporarily.

Reporter John Kemp noted in a recent column that the so-called Troika called now more than ever: all three countries produced in the north 11 million bpd a day in October, a record level and more than combined production of the rest of the OPEC. And according to OPEC, this state of affairs will continue to develop in an unfavorable direction for OPEC, with combined troika production rising to more than 40% of the global total this year, while the OPEC share will fall below 30%.

Each of the three producers has their own oil production policy relatively independent of other producers. "True, Saudi Arabia and Russia have played in the same team for the past two years, largely because the game strategy has been mutually beneficial. , I have seen harsh clues that when the interests of the two begin to differentiate, they are likely to give up team play and pursue their own priorities. At the same time, the US has become the biggest cradle outside OPEC + club, with an unexpectedly rising production that could push it to the top spot globally next year.

Production will continue to grow only if OPEC decides to start production again to push higher prices, further enhancing the US's importance in the global oil market. So, means that OPEC is as good as dead? For now, especially yes. Most of its members, as Kemp notes, fall into one or more of the following categories: "they are struggling with sanctions, mistakes and disturbances, too small to count, maximize production instead of participating in exit controls; or simply aligns its exit policies with those of Saudi Arabia. " Related: $ 50 Oil shakes test

However, the future remains uncertain. The most respectable forecasting factors, such as the International Energy Administration and the International Energy Agency, are optimized in relation to rising oil demand, but optimistic forecasts come to terms: most recently, the AEI has said in the light of World Energy Outlook that producers will have to make investments in us conventional production to be substantially a solution to respond to this demand. Failing this, the US should increase its shale oil production by up to 10 million bpd in seven years by 2025, which is a bold target.

OPEC members are obvious candidates for some of this increase in production. Despite many concerns about the reserve capacity of the cartel earlier this year, when it became clear that cuts should be reversed to cut prices, some members, such as Iraq and Libya, are on the rise. It is true that this growth will never be close to the more than one million bpd that US producers. have added in the last year, but could be substantial for Iraq if political and price conditions allow.

In addition, it is unlikely that Venezuela and Iran will spend the rest of eternity under sanctions. There is, however, a far-away possibility at the moment that these two may at some point reverse the decline in production they are now experiencing. Iran has already shown that it could go up quickly if given the chance. In other words, the influence of OPEC on oil markets may decline, but it may be too early to bury the cartel for good yet.

By Irina Slav for Oilprice.com

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