Oil and Gas

The Bear And Bull

OPEC’s policy of restricting oil production in a bid to maintaining a reasonable oil price for its members was challenged by the bullish production strategy of the United States and Russia. For instance following the imposition of Iran sanction, it provided an opportunity for OPEC to increase production to cover up for Iran. However, oil supply from OPEC members remained steady (though declining) at 32mb/d over the first half of the year. It was in the third quarters of the year that OPEC output increased slightly to 32.6mb/d from 32.12 mb/d in the second quarter. OPEC policy, have created an opportunity for in non-member especially the United been the second largest consumer of global crude now becoming the leading producer of crude oil, given a favourable market price. The share of non-OPEC members in the oil market is growing and this threatens the influence of OPEC in the global oil market, as the growth experienced in oil supply is largely due to non-OPEC members. However the bearish nature of OPEC in restricting oil production could be strategic, given the fact that OPEC member countries account for about 82% of World proven oil reserve with the Middle East members accounting for 65% of OPEC proven reserves.

Breakdown of 2018 oil production between OPEC and non OPEC countries. Source: OPEC
OPEC logo. Source: Business and Maritime West Africa



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