Crude oil prices are falling on Friday under pressure from the postponed final decision on OPEC oil production, which expects Russia’s support. The futures on US crude oil WTI with delivery in January fell by 0.93% to 51.01 USD per barrel, while the Brent variety depreciated by 0.93% to 59.50 USD per barrel.
Prices are declining today as oil fell about 3% on Thursday. The situation is currently due to the OPEC meeting in Vienna, which had not announced a decision to reduce oil production.
The analysts still expect to have a solution in some form to reduce supply.
The crude oil producers have been hit by a 30% drop in raw material prices since October, while supply is rising against a backdrop of weaker demand prospects because of the slowdown in the global economy.
Crude oil production
Crude oil yields of the largest producers – OPEC, Russia and the United States – rose by 3.3 million barrels per day since 2017 to 56.38 million barrels per day, which is 60% of world consumption. The volume with which production increased was equal to the oil produced by one of the major OPEC producers – the United Arab Emirates.
The global oil production increase is largely due to the large US yields, which since the beginning of 2016 has risen by 2.5 million barrels per day to a record 11.7 million barrels per day. This has turned the United States into the world’s largest oil producer. As a result, the United States has become a net exporter of oil for the first time since 1973.
Saudi Arabia and its Gulf ally the United Arab Emirates set all-time highs in their production in November, the month on which U.S. sanctions on Iran’s oil snapped back. Saudi Arabia reported oil yields increase of 350,000 barrels per day in November to 11.02 million barrels per day. The output is 1 million barrels per day higher than the level at which Riyadh was producing in May this year after it opened the taps to offset what was expected to be a steep loss of Iranian oil supply as U.S. sanctions were drawing nearer.
The UAE also significantly boosted its oil production by 130,000 barrels per day from October to 3.3 million barrels per day in November.
Iran, in view of the US sanctions stifling its exports, saw its oil production drop below 3 million barrels per day.
Iraq’s oil production dropped by 50,000 barrels per day to 4.57 million barrels per day, as bad weather at the Basra ports disrupted loadings last month. Venezuela’s production dropped slightly to stand at 1.17 million barrels per day.
The US has become a net exporter of crude oil
Last week, the United States exported more oil and gasoline than they imported. This makes the United States more independent than OPEC and Saudi Arabia. In the week ending November 30, the US oil exports amounted to more than 3.2 million barrels per day, government data showed. Thus, in the overall balance, the country exported 211,000 barrels per day more than its imported.
Currently, OPEC is struggling with Russia to reduce yields to stabilize the cost of raw materials. The US President Donald Trump recently put pressure on the cartel to keep oil prices lower by not agreeing on new quota deal.
Following OPEC talks in Vienna, Saudi Energy Minister Khalid al-Falih said he was not convinced that there would be an agreement when OPEC met with its allies again on Friday. The proposal for a total reduction in OPEC+ yield by 1 million barrels per day remained uncertain.
Failure to conclude a deal is another example of how OPEC is under pressure from forces that redefine the global oil map, leaving it extremely dependent on Russia’s support for the country outside the cartel.