"An indicator of the economy health"

Wealth Navigator published a column by Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance "An Indicator of the Economy Health" (Wealth Navigator, November 2024, pp.52-53).

Alexey Gromov notes:

Personally, I have no doubts about the effectiveness of OPEC+ as a tool for influencing global oil supply. Another thing is that over time, as before in the case of OPEC, issues arise with the discipline of its participants in terms of the actual fulfillment of the commitments declared by the countries to reduce production.

As for the third major global player, the oil producers from the United States, they are pursuing an independent policy, which has already led to market imbalance in 2014-2015. Then additional volumes of American shale oil appeared and the ban on its export from the United States was lifted. However, now the possibilities for further growth of shale oil production in the United States are limited due to the gradual exhaustion of the most highly productive shale deposits in the Permian basin and the need to maintain production at the current high level.

Nevertheless, in the future, we can expect increased influence on the global oil market from new large oil producing countries outside OPEC+. They are actively increasing oil production and bringing additional barrels to the market. First of all, I am referring to Brazil, Argentina and Guyana, which have some of the highest production growth rates in the world. So, in Brazil, this increase is 12% per year, and in Guyana – 40% per year.