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US crude oil production hit a new monthly record in August.
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This complicates things for OPEC+, which planned to start increasing production in December.
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Oil is down 20% from April highs, leading some exporters to be cautious about the quantities they pump.
The United States is pumping a record amount of oil. But this may not be good news for other crude-producing countries.
Domestic production reached 13.4 million barrels per day in August, eclipsing all previous monthly records. Companies in Texas and New Mexico led the rise, according to data from the U.S. Energy Information Administration.
This level of production puts the United States at odds with the plans of other oil-producing countries. OPEC+, an alliance led by Saudi Arabia and Russia, announced plans to begin a streak of monthly production increases in December. But given the drop in crude oil prices – down 20% from April’s peak – continued record U.S. production and weakening demand, oil traders believe OPEC+ will delay its program a second time.
This is the culmination of a multi-year period in which OPEC+ members cut production to support higher market prices, only to be undermined by exporters’ increased production non-OPEC members.
In 2025, analysts estimate that global demand will continue to decline, especially given China’s slowing oil consumption. This is one reason why the global oil surplus could reach 1.2 million barrels per day next year, according to JPMorgan. Otherwise, increased outflows from the United States, Brazil, Guyana and Canada will also play a role.
“OPEC+ increasingly appears to be seeking Eldorado: an oil market where demand is strong enough to be able to increase production and where prices remain above $80 per barrel,” wrote Bill Weatherburn, senior economist. climate and raw materials at Capital Economics. “We believe this will not be the case in 2025 either, as Chinese demand growth will remain weak and more oil supply from non-OPEC+ producers will enter the market.”
Read the original article on Business Insider
