IEA Reports Opec+ Holds Just Over Half of Global Oil Production

The International Energy Agency (IEA) has reported that Opec+ now controls just over half of the world’s oil production. This marks a significant shift in the global oil market, as demand growth slows and U.S. output reaches new heights. According to the IEA, Opec+’s market share has dropped to 51%, the lowest since the formation of the expanded cartel in 2016.

Despite efforts by Opec+ members, including countries like Russia, Mexico, and Azerbaijan, to implement production cuts to bolster oil prices, the market price for oil remains below $75 a barrel. This is a considerable decrease from nearly $100 in September. The IEA attributes the sluggish market to a drastic slowdown in global oil demand, influenced by macroeconomic factors such as rising interest rates and the diminishing impact of COVID-19 on the economy.

The agency forecasts that demand will fall short by nearly 400,000 barrels a day for the current quarter compared to previous expectations. This reduction in demand could further diminish Opec+’s influence on the market in 2024, as production increases from non-member countries are expected to meet the entire rise in global demand forecasted for that year.

The IEA points out that the U.S., which is currently producing 20 million barrels a day, is set to remain the leading source of supply growth next year. Additionally, rising output from countries like Guyana and Brazil is anticipated to contribute significantly to the oil supplied by non-Opec countries, potentially exceeding the forecast for global demand growth.

The year-on-year rate of oil demand growth is expected to decrease from 2.8 million barrels per day in the third quarter of 2023 to 1.9 million barrels per day in the current quarter. This decrease is partly attributed to weakened demand in Europe, where rate hikes have impacted the manufacturing sector, and in the Middle East and Russia.

Looking ahead to 2024, the IEA projects an increase in global oil demand by 130,000 barrels per day more than previously anticipated. This forecast aligns with the expectation of a “soft landing” in the U.S. economy, where the Federal Reserve aims to bring inflation back to its 2% target without triggering a recession.

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