LONDON: OPEC’s share of the global oil market has sunk to 30 per cent, the lowest in years, as a result of supply restraint and involuntary losses in Iran and Venezuela, and there is little sign yet producers are wavering on their output-cut strategy.
Crude oil from the Organization of the Petroleum Exporting Countries made up 30 per cent of world oil supply in July 2019, down from more than 34 per cent a decade ago and a peak of 35 per cent in 2012, according to OPEC data.
Despite OPEC-led supply cuts, oil has tumbled from April’s 2019 peak above $75 a barrel to $60, pressured by slowing economic activity amid concerns about the US-China trade dispute and Brexit.
OPEC and its allies have a deal to limit supply until March 2020.
The group tried to defend its market share under the previous Saudi oil minister, Ali al Naimi, who sharply ramped up production in a pump war campaign in 2014.
Naimi was hoping to win the battle, arguing that OPEC’s output was the world’s cheapest and would allow the group to outdo other producers such as the United States.
As a result of his strategy OPEC’s market share rose, while oil prices crashed to below $30 a barrel, triggering many bankruptcies of US oil firms and over-stretching the Saudi budget.
Riyadh and OPEC were forced to return to output cuts in 2017 to support prices, and sources within OPEC say there is no sign of any willingness to return to a pump war at the moment.
OPEC, Russia and other producers have been restraining supply for most of the period since Jan. 1, 2017. The alliance, known as OPEC+, in July renewed the pact until March 2020.
While helping to boost prices, OPEC’s market share has fallen steeply in the last two years. World supply has expanded by 2.7 per cent to 98.7 million barrels per day, while OPEC crude output has fallen 8.4 per cent to 29.6 million bpd. — Reuters
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