OPEC Oil Production Slumps in January, Market Share Shrinks Further

OPEC oil production saw its biggest monthly drop since July 2023 in January, according to a Reuters survey, highlighting the cartel’s declining market share despite recent output cuts.

Key Takeaways:

• Oil output: OPEC produced 26.33 million barrels per day (bpd) in January, down 410,000 bpd from December.
• Reasons for decline: Voluntary cuts by some members, shutdown of Libya’s Sharara field, and potential export reduction by Iran.
• Market share: OPEC losing ground to non-cartel producers like Brazil and the US.
• Saudi expansion halted: Saudi Arabia’s Aramco ordered to stop work on boosting capacity to 13 million bpd.

Details:

• Cuts and disruptions: Several OPEC members, including Iraq, Kuwait, and Algeria, implemented agreed-upon production cuts. Libya’s Sharara field, its largest, faced a temporary shutdown due to protests, further reducing output.
• Iran’s exports: Despite maintaining high production, Iran may have lowered exports due to US sanctions.
• Market share: While OPEC’s total output falls, Brazil and the US are increasing production, leading to a shrinking market share for the cartel.
• Saudi expansion on hold: The news comes after Saudi Arabia halted plans to expand its oil production capacity, potentially impacting future supplies.

Implications:

• The decline in OPEC production could contribute to higher oil prices, impacting consumers and economies globally.
• The shift in market share indicates a changing landscape for the oil industry, with non-OPEC producers playing a larger role.
• The halt in Saudi expansion raises questions about future OPEC production capabilities and market dynamics.