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Three countries currently account for nearly 40% of world crude oil production and only one of these countries is a member of the Organization of Petroleum Exporting Countries. The three countries are Russia, the United States and Saudi Arabia. As their influence on the oil markets increases with increasing production rates, OPEC is about to decline, at least temporarily.
Reuters' John Kemp said in a recent column on the subject that the so-called troika was now calling more than ever: the three countries were producing 11 million bpd per day in the north in October, a record and superior to combined production . from the rest of the OPEC. And, according to OPEC, this situation will continue to move in an unfavorable direction for OPEC, with the combined production of troika reaching over 40% of the global total this year, while OPEC's share would fall below 30%. %.
Each of the three producers has its own oil production policy that is relatively independent of that of other producers. Admittedly, Saudi Arabia and Russia have been playing on the same team for two years to a large extent because the game strategy has been mutually beneficial. Yet, we have seen many clues showing that the moment when the interests of both begin to diverge is likely to give up the game of the team and pursue its own priorities. Meanwhile, the United States has become the main deciding factor outside the OPEC + club, with production steadily increasing that could propel it to the top spot next year.
This production will continue to increase only if OPEC now decides to start reducing production again in order to raise prices, thus reinforcing the importance of the US market in the world oil market. So, does all this mean that OPEC is as dead? For the moment, mainly yes. Most of its members, as Kemp notes, belong to one or more of the following categories: "struggles under sanctions, mismanagement and unrest; is too small to count; maximizes production rather than participating in production controls; or simply align its production policies with those of Saudi Arabia. " Related: $ 50 oil puts shale to the test
The future however remains uncertain. The most respectable forecasters, such as the Energy Information Administration and the International Energy Agency, are optimistic about the growth of oil demand, but the optimistic forecasts are subject to conditions: the IEA recently declared in its World Energy Outlook that producers will have to invest more in new technologies. conventional production must be largely capable of meeting this demand. Otherwise, the United States should increase its shale oil production by 10 million bpd in seven years until 2025, which is at least a bold target.
OPEC members are obvious candidates for some of this growth in production. Despite concerns about the cartel's available capacity at the beginning of the year, when it became clear that cuts had to be reversed to contain prices, some members, such as Iraq and Libya, are in the process of developing their production. While this growth is likely to be well below the one million bpd that US producers have added over the past year, it could be substantial in the case of Iraq if political and price conditions allow.
In addition, Venezuela and Iran are unlikely to spend the rest of eternity under sanctions. For the moment, however, it is possible for these two countries to reverse the decline in their production at a given moment. Iran has already shown that it can go up fast enough if it has the chance. In other words, the influence of OPEC on the oil markets may be running out of steam, but it may be too early to bury the cartel for good.
By Irina Slav for Oilprice.com
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