OPEC’s oil production will decline from a projected 36 million barrels a day in 2019 to to 34.5 million barrels by 2024, according to International Energy Agency’s (IEA) latest report. The agency says that the decline will be caused largely by Iran and Venezuela, who have been reducing their output significantly.
U.S. sanctions that targets both Iran and the states that trade with it may cause Iran’s oil industry to crash, despite temporary waivers the Trump admistration granted to eight countries to allow them to continue importing Iranian oil.
In Venezuela, a country with the world’s largest oil reserves, oil production tumbled from 2.5 million barrels a day to about 1.3 million per day after sanctions were imposed. Daniel Yergin, IHS Markit vice chairman, says Venezuela has become much less important to world supply despite its impressive reserves. “The Maduro regime has been committing oil suicide,” Yergin told CNBC.
According to IEA, only two OPEC members will increase oil production significantly — United Arab Emirates and Iraq, adding 500,000 and 900,000 barrels per day, respectively.
While OPEC tightened oil production to tackle with glut, which affects prices, the oil output in the U.S., increased dramatically, making America the world’s biggest oil producer.
“The second wave of the U.S. shale revolution is coming,” said Fatih Birol, the IEA’s executive director at the CERAWeek energy conference in Houston. Birol expects that it will shake up oil and gas production and affect geopolitics.
EIA predicts that by 2024, the U.S. will surpass Russia, and will closely match Saudi Arabia in crude exports. According to the agency, the U.S. will account for 70 percent of the growth in oil production, and nearly 75 percent of liquefied natural gas exports by then.
Currently, the U.S. is pumping out 12 million barrels a day —one million more than last year. IHS predicts that the U.S. will produce 13 million barrels by the end of the year.
At a time when U.S. shale oil producers are boosting their production, OPEC is calling for ‘‘shared responsibility of all participating producing countries to avoid a relapse of the imbalance and continue to support oil-market stability in 2019.”
The market is watching closely OPEC’s next move. Key OPEC members and their allies are meeting in Baku, Azerbaijan this weekend to review global oil production. After the review, the members will gather in Vienna in April to announce the alliance’s output policy for the next months.