OPEC’s Dominance In Global Oil Supply Set To Continue As U.S. Shale Growth Slows

Before the pandemic, the U.S. oil supply grew exponentially, but those days are gone now that capital restraint, supply-chain bottlenecks, and lower well production all work together to limit production growth. American business leaders predict that OPEC (Organization of the Petroleum Exporting Countries) will continue to exert the greatest influence over the world’s oil supply for the foreseeable future.

Shale Industry Growth Slowing Dow

America became the new swing producer in 2010 as companies drilled as much as they could increase output. Though U.S. shale production is recovering slowly, and output hasn’t hit record levels from late 2019 and early 2020 yet, the post-Covid reality is quite different. The anticipated growth rate of 560,000 bpd is half of the pre-pandemic growth rate. Additionally, U.S. oil executives predict a growth of only 500,000 bpd in 2023.

OPEC Market Share To Surge

OPEC will continue to gain market share and influence over the world’s oil supply as the growth of U.S. output stagnates. According to shale executives, the cartel, which is now in charge of the markets, is headed by its largest producers in the Arab Gulf. When additional supply comes from OPEC and the U.S. shale growth plateaus, OPEC’s market share will rise from roughly 30% to close to 50% in the future.

Insight

OPEC officials have been warning for years that if the world wants to prevent slumbering into a supply crisis, investment in oil and gas needs to increase significantly. According to OPEC Secretary General Haitham Al Ghais- expanding capacity and supply is a responsibility that must be shared by all nations. OPEC cannot take on this responsibility alone.

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