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OPEC+’S Last Stand? A Fading Cartel Grapples With A Flood Of Oil
(MENAFN- The Rio Times) (Analysis) In a world awash with crude, OPEC+'s latest gambit-unveiled on Thursday with a fresh slate of production cuts to offset quota-busting members-feels less like a masterstroke and more like a desperate rear-guard action.
The plan, which demands Iraq, Kazakhstan, Russia, and even the usually disciplined Saudi Arabia to slash output by 189,000 to 435,000 barrels per day (bpd) through June 2026, aims to paper over the cracks of a cartel struggling to hold the line.
But as the United States, Brazil, Guyana, and other non-OPEC producers pump at breakneck speed, one must ask: does OPEC+ still wield the scepter it once did, or is this a hollow echo of a bygone era?
The Compensation Conundrum: A Band-Aid on a Gushing Wound
OPEC+'s new compensation scheme is a tacit admission of its own disarray. Iraq, long a serial overproducer, bears the brunt with the deepest cuts, while Kazakhstan's Tengiz field-supercharged by Chevron's American ingenuity-has pushed its output to 1.767 million bpd, far beyond its 1.468 million bpd quota.
Russia, too, joins the naughty list, its compliance wavering amid geopolitical chaos. Even Saudi Arabia, the cartel's linchpin, isn't spared, trimming a modest 6,000 to 15,000 bpd-a symbolic gesture, perhaps, but a telling one.
These cuts are meant to offset the 138,000 bpd monthly increases slated to begin in April 2025, a delicate balancing act OPEC+ touts as“gradual and flexible.” Yet, the numbers don't lie: the compensatory reductions dwarf the planned hikes, signaling not strength, but a scramble to maintain control.
The American Juggernaut and the Non-OPEC Surge
Enter the United States, the elephant in the room OPEC+ can no longer ignore. The EIA now forecasts U.S. crude production soaring to 13.59 million bpd in 2025, propelled by the Permian Basin's relentless efficiency-think longer laterals, multi-well pads, and a“drill, baby, drill” ethos championed by President Trump.
This isn't just a production spike; it's a paradigm shift. Across the Atlantic, Brazil's offshore fields and Guyana's Stabroek block are set to add hundreds of thousands of barrels daily, with Canada's oil sands quietly chipping in.
Together, non-OPEC supply is projected to swell by 1.4-1.5 million bpd in 2025-outpacing global demand growth, pegged at a tepid 1 million bpd. The math is brutal: OPEC+'s 5.86 million bpd of cuts, roughly 5.7% of global supply, is being drowned out by a tidal wave of new oil.
Market Impact: A Whisper in a Storm
Will OPEC+'s latest move jolt the market? Don't hold your breath. Brent crude, hovering at $74 per barrel today, is forecast to slip to $73-74 in 2025 and plummet to $66 by 2026 as inventories balloon.
'The cartel's cuts since April 2023 have failed to arrest this slide-prices are down from $85 when the reductions began, a stark indictment of their waning clout.
The U.S. strategy, blending record output with Trump's unpredictable tariff threats, looms large, while Brazil and Guyana's ascendance further dilutes OPEC+'s leverage.
Analysts at Wood Mackenzie and the EIA see a market tipping into surplus next year, and OPEC+'s compensatory cuts, while optically impressive, barely dent this oversupply. The cartel's“adaptable” approach sounds prudent, but it's a euphemism for reacting, not dictating.
OPEC+'s Fading Significance: A Cartel on Borrowed Time?
Once the undisputed arbiter of oil prices, OPEC+ now resembles a boxer past his prime-still swinging, but outmatched. Its market share, which stood at 53% in 2016 when the expanded group formed, is projected to shrink to 46% by 2026.
The U.S., now the world's top producer, doesn't just challenge OPEC+; it overshadows it. Add Brazil, Guyana, and Canada to the mix, and the non-OPEC bloc isn't just rising-it's dominating.
OPEC+'s tools-production cuts, quotas, promises of flexibility-feel increasingly archaic in a landscape where technological prowess and geopolitical muscle flex louder than cartel discipline.
Yet, let's not bury OPEC+ just yet. Its 5.86 million bpd of withheld supply still packs a punch, and a sudden crisis-a Middle East flare-up, a Venezuelan collapse-could briefly resurrect its relevance.
But the trend is unmistakable: as non-OPEC producers flood the market, OPEC+'s ability to steer prices erodes. The U.S. strategy, in particular, is a double-edged sword-more oil keeps prices low, but Trump's rhetoric hints at using energy as a geopolitical cudgel, potentially pressuring OPEC+ into irrelevance.
OPEC+'s new plan is a flicker of defiance in a darkening storm, but it's unlikely to shift the market's trajectory. The U.S., Brazil, Guyana, and their ilk are rewriting the energy script, and OPEC+'s cuts-however bold-can't outrun the numbers.
The plan, which demands Iraq, Kazakhstan, Russia, and even the usually disciplined Saudi Arabia to slash output by 189,000 to 435,000 barrels per day (bpd) through June 2026, aims to paper over the cracks of a cartel struggling to hold the line.
But as the United States, Brazil, Guyana, and other non-OPEC producers pump at breakneck speed, one must ask: does OPEC+ still wield the scepter it once did, or is this a hollow echo of a bygone era?
The Compensation Conundrum: A Band-Aid on a Gushing Wound
OPEC+'s new compensation scheme is a tacit admission of its own disarray. Iraq, long a serial overproducer, bears the brunt with the deepest cuts, while Kazakhstan's Tengiz field-supercharged by Chevron's American ingenuity-has pushed its output to 1.767 million bpd, far beyond its 1.468 million bpd quota.
Russia, too, joins the naughty list, its compliance wavering amid geopolitical chaos. Even Saudi Arabia, the cartel's linchpin, isn't spared, trimming a modest 6,000 to 15,000 bpd-a symbolic gesture, perhaps, but a telling one.
These cuts are meant to offset the 138,000 bpd monthly increases slated to begin in April 2025, a delicate balancing act OPEC+ touts as“gradual and flexible.” Yet, the numbers don't lie: the compensatory reductions dwarf the planned hikes, signaling not strength, but a scramble to maintain control.
The American Juggernaut and the Non-OPEC Surge
Enter the United States, the elephant in the room OPEC+ can no longer ignore. The EIA now forecasts U.S. crude production soaring to 13.59 million bpd in 2025, propelled by the Permian Basin's relentless efficiency-think longer laterals, multi-well pads, and a“drill, baby, drill” ethos championed by President Trump.
This isn't just a production spike; it's a paradigm shift. Across the Atlantic, Brazil's offshore fields and Guyana's Stabroek block are set to add hundreds of thousands of barrels daily, with Canada's oil sands quietly chipping in.
Together, non-OPEC supply is projected to swell by 1.4-1.5 million bpd in 2025-outpacing global demand growth, pegged at a tepid 1 million bpd. The math is brutal: OPEC+'s 5.86 million bpd of cuts, roughly 5.7% of global supply, is being drowned out by a tidal wave of new oil.
Market Impact: A Whisper in a Storm
Will OPEC+'s latest move jolt the market? Don't hold your breath. Brent crude, hovering at $74 per barrel today, is forecast to slip to $73-74 in 2025 and plummet to $66 by 2026 as inventories balloon.
'The cartel's cuts since April 2023 have failed to arrest this slide-prices are down from $85 when the reductions began, a stark indictment of their waning clout.
The U.S. strategy, blending record output with Trump's unpredictable tariff threats, looms large, while Brazil and Guyana's ascendance further dilutes OPEC+'s leverage.
Analysts at Wood Mackenzie and the EIA see a market tipping into surplus next year, and OPEC+'s compensatory cuts, while optically impressive, barely dent this oversupply. The cartel's“adaptable” approach sounds prudent, but it's a euphemism for reacting, not dictating.
OPEC+'s Fading Significance: A Cartel on Borrowed Time?
Once the undisputed arbiter of oil prices, OPEC+ now resembles a boxer past his prime-still swinging, but outmatched. Its market share, which stood at 53% in 2016 when the expanded group formed, is projected to shrink to 46% by 2026.
The U.S., now the world's top producer, doesn't just challenge OPEC+; it overshadows it. Add Brazil, Guyana, and Canada to the mix, and the non-OPEC bloc isn't just rising-it's dominating.
OPEC+'s tools-production cuts, quotas, promises of flexibility-feel increasingly archaic in a landscape where technological prowess and geopolitical muscle flex louder than cartel discipline.
Yet, let's not bury OPEC+ just yet. Its 5.86 million bpd of withheld supply still packs a punch, and a sudden crisis-a Middle East flare-up, a Venezuelan collapse-could briefly resurrect its relevance.
But the trend is unmistakable: as non-OPEC producers flood the market, OPEC+'s ability to steer prices erodes. The U.S. strategy, in particular, is a double-edged sword-more oil keeps prices low, but Trump's rhetoric hints at using energy as a geopolitical cudgel, potentially pressuring OPEC+ into irrelevance.
OPEC+'s new plan is a flicker of defiance in a darkening storm, but it's unlikely to shift the market's trajectory. The U.S., Brazil, Guyana, and their ilk are rewriting the energy script, and OPEC+'s cuts-however bold-can't outrun the numbers.
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