OPEC is predicting that competition with the U.S. will drop significantly in less than five years, allowing members of the world’s largest oil cartel to keep dominating the market.
During a meeting in Algiers, Algeria, members of the Organization of the Petroleum Exporting Countries (OPEC) predicted Sunday that U.S. shale growth would “slow significantly” after 2023, triggering renewed demand for their own oil. OPEC, according to The Wall Street Journal, expects U.S. output to top off at 14.3 million barrels a day around 2027 and then drop to an average of 12.1 million barrels a day by 2040.
The oil cartel predicted in a report published Sunday global appetite for OPEC oil will grow as American supply steadily declines.
“Thereafter, a gradual decline in non-OPEC liquids supply, coupled with moderate, but sustained global demand growth, leads to a steady increase in demand for OPEC crude, which rises to nearly 40 million barrels a day by 2040,” the report forecasted.
The cartel, however, also acknowledged how explosive growth in the U.S. has currently upended the global market.
“Declining demand for OPEC crude is a result of strong non-OPEC supply in the 2017–2023 period, most notably from U.S. tight oil,” OPEC said of its long-term outlook. “The U.S. remains by far the most important source of medium-term supply growth, contributing … two-thirds of new supply, driven by surging tight oil output.” (RELATED: What Will Trump Do Now That OPEC Ignored His Plea For Lower Oil Prices?)
American oil producers have experienced unprecedented growth in recent years, largely thanks to the implementation of hydraulic fracturing, which has unlocked fossil fuel reserves long believed as uneconomical to extract. The U.S. has now surpassed both Saudi Arabia and Russia in becoming the world’s largest producer of crude oil.
However, this has not shielded U.S. consumers from OPEC’s manipulation of oil price. In a coordinated effort to keep prices up in the face of strong U.S. output, OPEC has worked to keep production low.
Ahead of their Sunday meeting, U.S. President Donald Trump warned members — again — to stop raising oil prices.
We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
— Donald J. Trump (@realDonaldTrump) September 20, 2018
In an apparent snub to the president’s demand, the cartel on Sunday did not agree to increase production for the immediate future.
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