SAMPSON ENYONGEKERE, UYO
A globally renowned and revered energy expert, Engr. (Dr.) Wisdom Patrick Enang is of the opinion that crude oil production in countries that are non-members of OPEC (Organization of the Petroleum Exporting Countries) is set to account for most of the global supply growth both in year 2025 and the years to come.
Dr. Enang gave the hint on Friday, February 21, in Uyo the Akwa Ibom State capital, while speaking with newsmen.
In his opening remarks, the astute scholar revealed that there will be a non-OPEC production growth at an impressive 1.8 million barrels daily for this year, and 1 million barrels daily next year, which may not go down well for OPEC members from a market share standpoint.
He further added that much of the 1.8 million barrels per day production expected from non-OPEC members in 2025 will be led by the United States, Canada, Guyana and Brazil.
“OPEC and its partners in OPEC+ led by Russia have been withholding a substantial portion of their combined oil production for over 3 years now, an amount close to 5.7% of global supply. This has helped keep international prices relatively high, motivating more drilling in non-OPEC countries.”
“With the aggressive crude production drive by the United States (a non-OPEC member) dubbed ‘Drill-Baby-Drill’, one wonders how much longer OPEC and its OPEC+ friends will keep curbing their own output and market share, to the benefit of their rivals outside the cartel.”
According to the Akwa Ibom born, British trained Chartered Engineer, OPEC and OPEC+ have shown impressive restraint with production over the past 3 years.
“In the past, OPEC would have already opened the taps to drown any competition. The subsisting restraint seems to have convinced forecasters that a reversal of that policy is quite unlikely, and rightly so.”
“OPEC officials have consistently repeated that the group has no plans to change tack, regardless of whether it is the International Energy Agency (IEA) asking them to boost production or the U.S. President.”
“Contextually speaking, per the IEA, OPEC+ had a combined market share of 53% in 2016 when the broader producer group was formed. In 2024, that share had fallen to 46% because of cuts and growing competition. This fall in market share is further expected in 2025, occasioned by the reserved stance of the OPEC+ cartel, and increased production drive by non-OPEC members.”
On the reason behind OPEC’s reserved stance, the economic enthusiast maintained that crude stocks have continued to shrink globally, thus prompting the believe that sooner or later, the reality of declining global oil inventories will assert itself among traders, leading to a change in betting behavior, and ultimately resulting in minimal disruptions to crude pricing.
“According to the IEA, in January alone, global crude oil stocks took a plunge of 950,000 barrels daily amid stronger, seasonally driven demand.”
“Also, historically speaking, OPEC has in the past reacted to competition by flooding the market with crude. This worked for sometime until when Saudi Arabia and Russia had a disagreement on production policies, and the Saudis launched an oil price war which led to a 65% drop in oil prices, enabled significantly by reduced demand due to the COVID-19 pandemic in 2020.”
“Whether or not OPEC+ would risk a price war in future remains highly uncertain going by the fundamentals in view. Nonetheless, as expected, efforts within the cartel would revolve around ensuring that oil prices are high enough to fund the national budget of its members.”
Post a Comment
0Comments