Saudi Arabia's economy has contracted 4.8% year-on-year in the second quarter, according to flash estimates, highlighting the kingdom's continued dependence on oil revenues despite years of economic diversification efforts.

The decline was driven primarily by a 24.7% drop in oil-related activities, while non-oil sectors provided only limited support. The latest figures come as geopolitical tensions across West Asia continue to influence oil production, energy markets, and global supply chains.

Although Saudi Arabia's Vision 2030 aims to reduce reliance on hydrocarbons, the latest GDP data underscores the challenges of transforming an economy still heavily tied to crude oil exports.

Saudi Arabia's Economy Shrinks 4.8% as Oil Slump and West Asia Tensions Weigh on Growth

Eight members of the OPEC+ group of oil-producing nations said on Sunday they were extending supply cuts until the end of December.

The move is aimed at boosting oil prices amid uncertain demand and accelerating supply, with an eye on the imminent US presidential election, though analysts predict a limited impact.

The eight countries "have agreed to extend the November 2023 voluntary production adjustments of 2.2 million barrels per day for one month until the end of December 2024," the Vienna-based Organization of the Petroleum Exporting Countries said in a statement.

The eight from the 22-member group extending the cuts are leaders Saudi Arabia and Russia, as well as Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates.

They have been delaying production increases amid concerns over slowing demand, which has weighed on oil prices in recent months.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the announcement was "the logical next step of the persistent downside pressure on oil prices due to sluggish Chinese and weakening global demand outlook and ample non-OPEC supply".

But any boost to oil prices would "unlikely" last unless OPEC+ "takes further measures to restrict production", Ozkardeskaya told AFP.

And even then, "their restriction strategy hasn't led to a sustainable rise of oil prices," she said, adding the grouping now accounted for less than half of the global oil output.

Jorge Leon, an analyst with Rystad Energy, said OPEC+ was awaiting the results of the November 5 US presidential election, which "will have a significant impact on the oil market".

"I am not so sure who would Opec prefer, but a trade war would mean lower demand," Leon told AFP, adding a trade war was "likely" if Republican Donald Trump wins.

OPEC+ ministers are due to meet in early December in Vienna at the group's headquarters, but with Sunday's announcement, the eight countries have already decided not to reopen the taps until at least early 2025.

During the last ministerial meeting in June, OPEC+ had still announced they wanted to increase their production from October, though it has stressed that this decision could be reviewed at any time.

Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION&nbsp;audience. 
&nbsp;

Eight members of the OPEC+ group of oil-producing nations said on Sunday they were extending supply cuts until the end of December. The move is aimed at boosting oil prices amid uncertain demand and accelerating supply, with an eye on the imminent US presidential election, though analysts predict a limited impact.

Eight members of the OPEC+ group of oil-producing nations said on Sunday they were extending supply cuts until the end of December. The move is aimed at boosting oil prices amid uncertain demand and accelerating supply, with an eye on the imminent US presidential election, though analysts predict a limited impact. The eight countries "have agreed to extend the November 2023 voluntary production adjustments of 2.2 million barrels per day for one month until the end of December 2024," the Vienna-based Organization of the Petroleum Exporting Countries said in a statement. The eight from the 22-member group extending the cuts are leaders Saudi Arabia and Russia, as well as Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates. They have been delaying production increases amid concerns over slowing demand, which has weighed on oil prices in recent months. Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the announcement was "the logical next step of the persistent downside pressure on oil prices due to sluggish Chinese and weakening global demand outlook and ample non-OPEC supply". But any boost to oil prices would "unlikely" last unless OPEC+ "takes further measures to restrict production", Ozkardeskaya told AFP. And even then, "their restriction strategy hasn't led to a sustainable rise of oil prices," she said, adding the grouping now accounted for less than half of the global oil output. Jorge Leon, an analyst with Rystad Energy, said OPEC+ was awaiting the results of the November 5 US presidential election, which "will have a significant impact on the oil market". "I am not so sure who would Opec prefer, but a trade war would mean lower demand," Leon told AFP, adding a trade war was "likely" if Republican Donald Trump wins. OPEC+ ministers are due to meet in early December in Vienna at the group's headquarters, but with Sunday's announcement, the eight countries have already decided not to reopen the taps until at least early 2025. During the last ministerial meeting in June, OPEC+ had still announced they wanted to increase their production from October, though it has stressed that this decision could be reviewed at any time. Disclaimer: This story has been published from a news agency feed with minimal edits to adhere to WION's style guide. The headline may have been changed to better reflect the content of the story or to make it more suitable for WION audience.

OPEC+ extends oil supply cuts until December to boost prices amid global demand concerns

Oil prices climbed for the third day on signs of stronger demand and hopes that the Federal Reserve will soon take its foot off the gas.&nbsp;

Brent crude ticked closer to $86 per barrel, while West Texas Intermediate eclipsed $83.

Fresh data showed an increase in US gasoline and jet fuel consumption as the summer travel season gets underway. Additionally, nationwide crude stockpiles continued to dwindle, while Brent's prompt spread emphasised tighter near-term conditions.

Slumping to its weakest since 2021, US inflation slowed sharply in June, fanning expectations that the Federal Reserve might cut borrowing costs this quarter. Concerning this development in price action, the sudden weakening of the US dollar happened amid a renewed appeal for commodities among overseas buyers.

Oil prices have risen this year as OPEC+ has restrained output to drain a glut in the market, offsetting increases from nations outside the group. The cartel anticipates that worldwide oil demand will gain more than 2 million barrels per day this year. However, the International Energy Agency injected a note of caution as it forecasted a slowing down of China's economic growth.

The underlying metrics portray strength despite lacklustre recent headline price movements. Brent's prompt spread- the gap between the two nearest contracts broke above $1 a barrel in backwardation this week, over twice the difference a month ago.

The performance of oil recently reflects some of the complexities that are at play in markets. In a market poised by improving indicators of demand and a looming potential pivot by the Federal Reserve, the oil market is caught between supply constraints and economic shifts.

Oil prices climbed for the third day on signs of stronger demand and hopes that the Federal Reserve will soon take its foot off the gas. Brent crude ticked closer to $86 per barrel, while West Texas Intermediate eclipsed $83.

Oil prices climbed for the third day on signs of stronger demand and hopes that the Federal Reserve will soon take its foot off the gas. Brent crude ticked closer to $86 per barrel, while West Texas Intermediate eclipsed $83. Fresh data showed an increase in US gasoline and jet fuel consumption as the summer travel season gets underway. Additionally, nationwide crude stockpiles continued to dwindle, while Brent's prompt spread emphasised tighter near-term conditions. Slumping to its weakest since 2021, US inflation slowed sharply in June, fanning expectations that the Federal Reserve might cut borrowing costs this quarter. Concerning this development in price action, the sudden weakening of the US dollar happened amid a renewed appeal for commodities among overseas buyers. Oil prices have risen this year as OPEC+ has restrained output to drain a glut in the market, offsetting increases from nations outside the group. The cartel anticipates that worldwide oil demand will gain more than 2 million barrels per day this year. However, the International Energy Agency injected a note of caution as it forecasted a slowing down of China's economic growth. The underlying metrics portray strength despite lacklustre recent headline price movements. Brent's prompt spread- the gap between the two nearest contracts broke above $1 a barrel in backwardation this week, over twice the difference a month ago. The performance of oil recently reflects some of the complexities that are at play in markets. In a market poised by improving indicators of demand and a looming potential pivot by the Federal Reserve, the oil market is caught between supply constraints and economic shifts.

Oil prices ascend as demand dynamics and Fed policy shifts converge

The International Energy Agency (IEA) has signalled a significant deceleration in global oil demand growth, citing economic weakness in key nations. Bloomberg cited the monthly report, wherein the IEA slashed estimates for the final quarter of 2023, reducing consumption growth by nearly 400,000 barrels a day. The report suggests a pronounced slowdown in oil demand, attributing it to the ongoing deterioration in the macroeconomic climate globally.<o:p></o:p>

The IEA points to evidence of a diminishing momentum in oil demand growth, stating, “The increasingly apparent loss of oil demand growth momentum reflects the deterioration in the macroeconomic climate”. <o:p></o:p>

The economic downturn is impacting crude prices, which recently hit a five-month low below $73 a barrel in London. The decline, around 23 per cent since late September, is linked to concerns over oversupply and China's economic outlook, coupled with increased oil output from various exporters.<o:p></o:p>

Despite OPEC+ announcing fresh production cutbacks on November 30, aiming to eliminate an anticipated oversupply in the first quarter, the IEA notes that this move will come at a cost for the coalition. It predicts that OPEC+ will witness its market share reduced to the lowest level since its formation seven years ago. The report also highlights the impact on the market dynamics, with a surge in supply from the US, squeezing out traditional Middle Eastern producers like Saudi Arabia.<o:p></o:p>

The IEA underscores the challenge for key producers in defending their market share and maintaining oil prices, especially with the continuous rise in global output and a simultaneous slowdown in demand growth. The report emphasises that the growth in American oil production, exceeding 20 million barrels a day in September, is contributing to the complexity of the situation.<o:p></o:p>

Europe, Russia, and the Middle East are the driving forces behind the IEA's downgrade of fourth-quarter demand estimates. Europe, in particular, is facing a softening demand due to a broad manufacturing and industrial slump, along with headwinds from higher interest rates.<o:p></o:p>

While global oil demand is expected to increase substantially this year by 2.3 million barrels a day, reaching a record average of 101.7 million a day, the IEA anticipates a significant slowdown next year. Growth is projected to decrease by approximately 50 per cent to 1.1 million barrels a day as the post-pandemic consumption rebound subsides, and consumers shift towards more efficient or electric vehicles. The agency suggests that the rise in consumption can likely be met by a corresponding increase in non-OPEC+ supplies.<o:p></o:p>

This anticipated slowdown aligns with the goals agreed upon at the COP28 climate talks in the United Arab Emirates, which concluded with a pledge to transition away from fossil fuels.<o:p></o:p>

(With inputs from Bloomberg)<o:p></o:p>

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The International Energy Agency (IEA) has signalled a significant deceleration in global oil demand growth, citing economic weakness in key nations. Bloomberg cited the monthly report, wherein the IEA slashed estimates for the final quarter of 2023, reducing consumption growth by nearly 400,000 barrels a day.

The International Energy Agency (IEA) has signalled a significant deceleration in global oil demand growth, citing economic weakness in key nations. Bloomberg cited the monthly report, wherein the IEA slashed estimates for the final quarter of 2023, reducing consumption growth by nearly 400,000 barrels a day. The report suggests a pronounced slowdown in oil demand, attributing it to the ongoing deterioration in the macroeconomic climate globally. The IEA points to evidence of a diminishing momentum in oil demand growth, stating, “The increasingly apparent loss of oil demand growth momentum reflects the deterioration in the macroeconomic climate”. The economic downturn is impacting crude prices, which recently hit a five-month low below $73 a barrel in London. The decline, around 23 per cent since late September, is linked to concerns over oversupply and China's economic outlook, coupled with increased oil output from various exporters. Despite OPEC+ announcing fresh production cutbacks on November 30, aiming to eliminate an anticipated oversupply in the first quarter, the IEA notes that this move will come at a cost for the coalition. It predicts that OPEC+ will witness its market share reduced to the lowest level since its formation seven years ago. The report also highlights the impact on the market dynamics, with a surge in supply from the US, squeezing out traditional Middle Eastern producers like Saudi Arabia. The IEA underscores the challenge for key producers in defending their market share and maintaining oil prices, especially with the continuous rise in global output and a simultaneous slowdown in demand growth. The report emphasises that the growth in American oil production, exceeding 20 million barrels a day in September, is contributing to the complexity of the situation. Europe, Russia, and the Middle East are the driving forces behind the IEA's downgrade of fourth-quarter demand estimates. Europe, in particular, is facing a softening demand due to a broad manufacturing and industrial slump, along with headwinds from higher interest rates. While global oil demand is expected to increase substantially this year by 2.3 million barrels a day, reaching a record average of 101.7 million a day, the IEA anticipates a significant slowdown next year. Growth is projected to decrease by approximately 50 per cent to 1.1 million barrels a day as the post-pandemic consumption rebound subsides, and consumers shift towards more efficient or electric vehicles. The agency suggests that the rise in consumption can likely be met by a corresponding increase in non-OPEC+ supplies. This anticipated slowdown aligns with the goals agreed upon at the COP28 climate talks in the United Arab Emirates, which concluded with a pledge to transition away from fossil fuels. (With inputs from Bloomberg) WATCH WION LIVE HERE

Global oil demand faces sharp slowdown as economic woes bite, IEA warns

As rich countries transition to green energy and abandon West Asia’s treasure trove, Saudi Arabia is allegedly working on a plan to artificially boost oil demand in poorer nations, especially those in Africa, an undercover investigation has revealed.

The investigation has been carried out by the Centre for Climate Reporting and Channel 4 News, a British TV channel.

It revealed that Riyadh aspires to drive up the use of fossil fuel-powered cars, buses and planes in Africa and elsewhere, under its so-called oil demand sustainability programme (ODSP).

<h2>What is Saudi Arabia’s ODSP?</h2>

The biggest aim of ODSP is to “artificially stimulate demand in some key markets,” according to Saudi officials cited by an undercover Channel 4 News reporter.

To achieve this goal, Saudi Arabia plans to boost the development of supersonic air travel, which will use three times more fuel than conventional planes. It also plans to join hands with carmakers to produce cheap engines en masse to make cars more affordable, thus making fossil fuel more lucrative for the poor.

Watch:&nbsp;Saudi Arabia's non-oil economy shows resilience in October | World Business Watch

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“The Saudi government is like a drug dealer trying to get Africa hooked on its harmful product,” Mohamed Adow, the director of the think tank Power Shift Africa, was quoted as saying by The Guardian.

“The rest of the world is weaning itself off dirty and polluting fossil fuels and Saudi Arabia is getting desperate for more customers and is turning its sights on Africa. It’s repulsive,” he added.

<h2>ODSP’s official version</h2>

The Saudi government sells ODSP as a scheme to “remove barriers” to energy and transport in poorer countries and “increase sustainability”, for example by providing gas cooking stoves to replace wood burning.

Its stated objective, according to an Arabic site, is to “sustain and develop the demand for hydrocarbons as a competitive source of energy, by raising its economic and environmental efficiency, while ensuring that the transition in the energy mix [is] sustainable for the kingdom of Saudi Arabia”.

<a href="https://www.wionews.com/world/saudi-arabia-other-arab-nations-block-proposal-to-cut-all-ties-with-israel-report-658093">Also read:&nbsp;Saudi Arabia, other Arab nations block proposal to cut all ties with Israel: Report</a>

Saudi Arabia still maintains said it is committed to the Paris Agreement’s climate goals to restrict global heating to well below 2C while aiming for a 1.5C rise at most.

The revelation about Saudi Arabia comes just days ahead of the COP28 Summit slated to be held this Thursday (Nov 30) in the UAE.

(With inputs from agencies)

As rich countries transition to green energy and abandon West Asia’s treasure trove, Saudi Arabia is allegedly working on a plan to artificially boost oil demand in poorer nations, especially those in Africa, an undercover investigation has revealed.

As rich countries transition to green energy and abandon West Asia’s treasure trove, Saudi Arabia is allegedly working on a plan to artificially boost oil demand in poorer nations, especially those in Africa, an undercover investigation has revealed. The investigation has been carried out by the Centre for Climate Reporting and Channel 4 News, a British TV channel. It revealed that Riyadh aspires to drive up the use of fossil fuel-powered cars, buses and planes in Africa and elsewhere, under its so-called oil demand sustainability programme (ODSP). What is Saudi Arabia’s ODSP? The biggest aim of ODSP is to “artificially stimulate demand in some key markets,” according to Saudi officials cited by an undercover Channel 4 News reporter. To achieve this goal, Saudi Arabia plans to boost the development of supersonic air travel, which will use three times more fuel than conventional planes. It also plans to join hands with carmakers to produce cheap engines en masse to make cars more affordable, thus making fossil fuel more lucrative for the poor. Watch: Saudi Arabia's non-oil economy shows resilience in October | World Business Watch × “The Saudi government is like a drug dealer trying to get Africa hooked on its harmful product,” Mohamed Adow, the director of the think tank Power Shift Africa, was quoted as saying by The Guardian. “The rest of the world is weaning itself off dirty and polluting fossil fuels and Saudi Arabia is getting desperate for more customers and is turning its sights on Africa. It’s repulsive,” he added. ODSP’s official version The Saudi government sells ODSP as a scheme to “remove barriers” to energy and transport in poorer countries and “increase sustainability”, for example by providing gas cooking stoves to replace wood burning. Its stated objective, according to an Arabic site, is to “sustain and develop the demand for hydrocarbons as a competitive source of energy, by raising its economic and environmental efficiency, while ensuring that the transition in the energy mix [is] sustainable for the kingdom of Saudi Arabia”. Also read: Saudi Arabia, other Arab nations block proposal to cut all ties with Israel: Report Saudi Arabia still maintains said it is committed to the Paris Agreement’s climate goals to restrict global heating to well below 2C while aiming for a 1.5C rise at most. The revelation about Saudi Arabia comes just days ahead of the COP28 Summit slated to be held this Thursday (Nov 30) in the UAE. (With inputs from agencies)

Riyadh covertly working on plans to artificially boost oil demand globally: Report

According to the International Energy Agency (IEA), the global oil demand is set to reach an all-time high in 2023 as the Chinese economy re-opens after ending its stringent zero-Covid policy. However, the Paris-based watchdog in its report published on Wednesday (January 18) also noted that the ongoing Russian invasion of Ukraine and the consequent Western sanctions on Moscow could affect the supply.&nbsp;

The demand for crude oil could surge by 1.9 million barrels per day (bpd) to reach a record 101.7 million bpd, said the IEA in its first monthly oil report of the year. It also noted, “Two wild cards dominate the 2023 oil market outlook: Russia and China.”&nbsp;This comes after crude oil prices soared last year amid fears of disruptions following Moscow’s invasion of Ukraine, however, later they stabilised as the Russian supply more or less continued while Europe faced an economic slowdown which lowered demand to some extent.&nbsp;

ALSO WATCH:&nbsp;<a href="https://www.wionews.com/videos/russian-oil-continues-to-flow-in-britain-western-hypocrisy-536228">Russian oil continues to flow in Britain | Western Hypocrisy</a>

However, IEA also said that there is a “high degree of uncertainty” about where the prices of oil could, in part, be attributed to the western sanctions on Russia, particularly the upcoming European Union ban on refined products which will take effect from February 5. The report also noted that despite sanctions, Russian oil output in December was dented only by 200,000 bpd.

“Russian supply slows under the full impact of sanctions, China will drive nearly half this global demand growth even as the shape and speed of its reopening remains uncertain,” said the IEA report. Notably, China’s demand for oil plunged for the first time in almost three decades due to the economic slowdown it faced while Beijing’s stringent Covid restrictions were in place.&nbsp;

ALSO READ |&nbsp;<a href="https://www.wionews.com/world/opec-decision-of-output-cut-not-aimed-against-us-says-saudi-arabia-525212">OPEC decision of output cut not aimed against US, says Saudi Arabia</a>

However, as the country re-opens, it paves the way for an increase in demand due to travel, trade and business activities. According to the IEA, this could, in turn, lead to a tighter global oil market due to increased demand from China and the “full impact” of Western sanctions on Russian oil.&nbsp;

“The preeminent driver of 2023 GDP and oil demand growth will be the timing and pace of China’s post-lockdown recovery,” said the IEA, as per Reuters.&nbsp;The Paris-based agency also said that the main growth of oil supply growth is set to take place from the United States as the OPEC+ will reduce theirs by 870,000 bpd.&nbsp;

(With inputs from agencies)&nbsp; 
 
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According to the International Energy Agency (IEA), the global oil demand is set to reach an all-time high in 2023 as the Chinese economy re-opens after ending its stringent zero-Covid policy.

According to the International Energy Agency (IEA), the global oil demand is set to reach an all-time high in 2023 as the Chinese economy re-opens after ending its stringent zero-Covid policy. However, the Paris-based watchdog in its report published on Wednesday (January 18) also noted that the ongoing Russian invasion of Ukraine and the consequent Western sanctions on Moscow could affect the supply. The demand for crude oil could surge by 1.9 million barrels per day (bpd) to reach a record 101.7 million bpd, said the IEA in its first monthly oil report of the year. It also noted, “Two wild cards dominate the 2023 oil market outlook: Russia and China.” This comes after crude oil prices soared last year amid fears of disruptions following Moscow’s invasion of Ukraine, however, later they stabilised as the Russian supply more or less continued while Europe faced an economic slowdown which lowered demand to some extent. ALSO WATCH: Russian oil continues to flow in Britain | Western Hypocrisy However, IEA also said that there is a “high degree of uncertainty” about where the prices of oil could, in part, be attributed to the western sanctions on Russia, particularly the upcoming European Union ban on refined products which will take effect from February 5. The report also noted that despite sanctions, Russian oil output in December was dented only by 200,000 bpd. “Russian supply slows under the full impact of sanctions, China will drive nearly half this global demand growth even as the shape and speed of its reopening remains uncertain,” said the IEA report. Notably, China’s demand for oil plunged for the first time in almost three decades due to the economic slowdown it faced while Beijing’s stringent Covid restrictions were in place. ALSO READ | OPEC decision of output cut not aimed against US, says Saudi Arabia However, as the country re-opens, it paves the way for an increase in demand due to travel, trade and business activities. According to the IEA, this could, in turn, lead to a tighter global oil market due to increased demand from China and the “full impact” of Western sanctions on Russian oil. “The preeminent driver of 2023 GDP and oil demand growth will be the timing and pace of China’s post-lockdown recovery,” said the IEA, as per Reuters. The Paris-based agency also said that the main growth of oil supply growth is set to take place from the United States as the OPEC+ will reduce theirs by 870,000 bpd. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Global oil demand to reach an all-time high this year as China re-opens, says IEA

OPEC raised its forecasts for world oil demand in the medium- and longer-term in an annual outlook released on Monday and said $12.1 trillion of investment is needed to meet this demand despite the energy transition.

WION Business News | OPEC raises long-term oil demand view

Nearly two years ago, the world’s oil producers slammed on the brakes and drastically cut production as the pandemic gripped the world’s economies. The sharp pullback came with an implicit promise that as factories reopened and planes returned to the air, the oil industry would revive, too, gradually scaling up production to help economies return to pre-pandemic health.

It is not exactly turning out that way. Oil producers are finding it harder than expected to ramp up output. Members of the cartel OPEC Plus, which agreed to cut output by about 10 million barrels a day in early 2020, are routinely falling well short of their rising monthly production targets.

“In a lot of places, once output has been reduced, it is not easy to bring it back,” said Richard Bronze, head of geopolitics at Energy Aspects, a London-based research firm.

Production in the United States, the world’s largest oil producer, has also been slow to recover from its 1-million-barrel-a-day plummet in 2020, as companies and investors are wary of committing money amid climate change concerns and volatile prices. The Energy Information Administration forecasts that U.S. crude output in 2022, while rising, is likely to average 500,000 barrels a day below 2019 levels.

This global pattern of lagging production has helped push oil prices to seven-year highs, stoking inflation, which has become a political issue in the United States and elsewhere. Brent crude, the international standard, is close to $84 a barrel, while West Texas Intermediate, the U.S. benchmark, is selling for close to $82.

A prolonged period when more oil has been consumed than pumped has drained tank farms to low levels. Investment in new drilling for new oil has also fallen to multiyear lows, though it is expected to pick up this year. At the same time, demand is expected to grow strongly, reaching pre-pandemic levels this year.

“The oil market appears to be heading for a period with little margin of safety,” Martijn Rats, an analyst at Morgan Stanley, the investment bank, wrote in a recent note to clients.

The gap between the target announced by OPEC Plus, which makes up nearly half the world’s oil output, and actual output seems to be growing. The International Energy Agency, a Paris-based forecasting group, pegged the shortfall of the 19 OPEC Plus countries covered by quotas at 650,000 barrels a day for November. Energy Aspects forecasts that the deficit will reach just over 1 million barrels a day this month, or 1% of world supplies, and will probably increase later in the year.

That deficit could be problematic because policymakers and some analysts may be overestimating how much more oil the group can add.

“OPEC Plus has been viewed as the main place that additional supply is going to come from,” Bronze said.

Of course, higher prices are likely to encourage a substantial increase of shale oil production in the United States. The tight market also gives Washington an incentive to lift sanctions on sales of Iranian oil by reaching a deal on Iran’s nuclear program.

Forecasters are split on the oil outlook, with the International Energy Agency saying in its most recent monthly report in December that “much-needed relief for tight markets is on the way.” The Energy Information Administration has forecast that oil prices will fall later this year.

Still, undershooting by countries like Nigeria and Angola has become the norm as their oil industries struggle. A variety of factors are causing production in some countries to fall short, including political turmoil, outmoded regulatory regimes and pressures on international oil companies to rethink their investments so as to bolster profits and reduce carbon emissions. That shift could leave developing countries that depend on oil income out in the cold.

“There are many basins that are simply of no interest anymore,” said Gerald Kepes, president of Competitive Energy Strategies, a consulting firm, referring to petroleum-bearing regions. In the eyes of international oil companies, even a country like Nigeria, Africa’s largest producer, “doesn’t make the cut,” he added.

Oil industry giants for decades courted Nigeria, investing billions of dollars, but production has been slipping. In November, the country was supposed to pump about 1.6 million barrels a day but missed that target by more than 300,000 barrels a day, according to the International Energy Agency.

A welter of problems lie behind the shortfall. Nigeria’s industry is plagued by damage to infrastructure caused by oil thieves and others, problems that have worsened in recent months, according to the industry.

International companies including Shell, which has long been a major investor in Nigeria, are gradually reducing their presence in swampy areas where their installations are vulnerable. They are being replaced by smaller companies with less capital to spend, analysts say.

Without investment in drilling and technology, even the best-endowed oil states will see their output dwindle. A case in point is troubled Venezuela, where, amid neglect of the industry, production has shrunk to relatively minuscule levels of less than 1 million barrels a day — less than one-tenth of Saudi Arabia’s output — despite claims to have the world’s largest reserves, about 300 billion barrels.

Kuwait, a wealthy Persian Gulf oil state, has seen its capacity to produce decline about 18% over three years. Kamel al-Harami, a Kuwaiti analyst, said that the domestic industry “does not have the experience and the expertise to deal with old and aged oil fields” but that public opinion is resistant to bringing in international companies.

Even Russia, which is roughly tied with Saudi Arabia as the leading producer in OPEC Plus, is close to the short-term limit of what it can produce, analysts say. Saudi Arabia, on the other hand, produces about 10% of the oil on the world’s market and could produce more.

“Most OPEC producers are becoming capacity-constrained,” said Bill Farren-Price, director of intelligence at Enverus, an energy market research firm. “But Saudi Arabia is a different story. Its appetite for active oil market management is undiminished,” he added.

Each month since the pandemic hit, OPEC Plus members have met to set output quotas. Following a schedule agreed to in July, the group plans to raise the overall output by 400,000 barrels a day each month, even though they are missing the targets.

Stung by gasoline prices that have risen about 40% in the last year, the White House has leaned on the Saudis and their allies to go faster in opening up the throttle, but OPEC officials have so far been unwilling to lower the quotas of those who are not able to hit targets and reassign them to other countries.

“We have to keep what they are allotted,” Prince Abdulaziz bin Salman, the Saudi oil minister, told journalists late last year. The alternative, he added, would be a monthly debate over “who gets what.”

Analysts say Saudi officials do not want to unilaterally increase output and risk busting up the arrangement with other producers that gives them so much control. In addition, the lagging countries serve as a stealthy way to trim the cartel’s output, helping the Saudis enjoy high prices while increasing their own production.

And time may not be on the side of the Biden administration and others urging more oil on the markets. As producers reach the limits of what they can make in the coming months, “it is going to be less and less impactful to demand that OPEC add more,” Bronze said.

Nearly two years ago, the world’s oil producers slammed on the brakes and drastically cut production as the pandemic gripped the world’s economies. The sharp pullback came with an implicit promise that as factories reopened and planes returned to the air, the oil industry would revive, too, gradually scaling up production to help economies return to pre-pandemic health.

Nearly two years ago, the world’s oil producers slammed on the brakes and drastically cut production as the pandemic gripped the world’s economies. The sharp pullback came with an implicit promise that as factories reopened and planes returned to the air, the oil industry would revive, too, gradually scaling up production to help economies return to pre-pandemic health. It is not exactly turning out that way. Oil producers are finding it harder than expected to ramp up output. Members of the cartel OPEC Plus, which agreed to cut output by about 10 million barrels a day in early 2020, are routinely falling well short of their rising monthly production targets. “In a lot of places, once output has been reduced, it is not easy to bring it back,” said Richard Bronze, head of geopolitics at Energy Aspects, a London-based research firm. Production in the United States, the world’s largest oil producer, has also been slow to recover from its 1-million-barrel-a-day plummet in 2020, as companies and investors are wary of committing money amid climate change concerns and volatile prices. The Energy Information Administration forecasts that U.S. crude output in 2022, while rising, is likely to average 500,000 barrels a day below 2019 levels. This global pattern of lagging production has helped push oil prices to seven-year highs, stoking inflation, which has become a political issue in the United States and elsewhere. Brent crude, the international standard, is close to $84 a barrel, while West Texas Intermediate, the U.S. benchmark, is selling for close to $82. A prolonged period when more oil has been consumed than pumped has drained tank farms to low levels. Investment in new drilling for new oil has also fallen to multiyear lows, though it is expected to pick up this year. At the same time, demand is expected to grow strongly, reaching pre-pandemic levels this year. “The oil market appears to be heading for a period with little margin of safety,” Martijn Rats, an analyst at Morgan Stanley, the investment bank, wrote in a recent note to clients. The gap between the target announced by OPEC Plus, which makes up nearly half the world’s oil output, and actual output seems to be growing. The International Energy Agency, a Paris-based forecasting group, pegged the shortfall of the 19 OPEC Plus countries covered by quotas at 650,000 barrels a day for November. Energy Aspects forecasts that the deficit will reach just over 1 million barrels a day this month, or 1% of world supplies, and will probably increase later in the year. That deficit could be problematic because policymakers and some analysts may be overestimating how much more oil the group can add. “OPEC Plus has been viewed as the main place that additional supply is going to come from,” Bronze said. Of course, higher prices are likely to encourage a substantial increase of shale oil production in the United States. The tight market also gives Washington an incentive to lift sanctions on sales of Iranian oil by reaching a deal on Iran’s nuclear program. Forecasters are split on the oil outlook, with the International Energy Agency saying in its most recent monthly report in December that “much-needed relief for tight markets is on the way.” The Energy Information Administration has forecast that oil prices will fall later this year. Still, undershooting by countries like Nigeria and Angola has become the norm as their oil industries struggle. A variety of factors are causing production in some countries to fall short, including political turmoil, outmoded regulatory regimes and pressures on international oil companies to rethink their investments so as to bolster profits and reduce carbon emissions. That shift could leave developing countries that depend on oil income out in the cold. “There are many basins that are simply of no interest anymore,” said Gerald Kepes, president of Competitive Energy Strategies, a consulting firm, referring to petroleum-bearing regions. In the eyes of international oil companies, even a country like Nigeria, Africa’s largest producer, “doesn’t make the cut,” he added. Oil industry giants for decades courted Nigeria, investing billions of dollars, but production has been slipping. In November, the country was supposed to pump about 1.6 million barrels a day but missed that target by more than 300,000 barrels a day, according to the International Energy Agency. A welter of problems lie behind the shortfall. Nigeria’s industry is plagued by damage to infrastructure caused by oil thieves and others, problems that have worsened in recent months, according to the industry. International companies including Shell, which has long been a major investor in Nigeria, are gradually reducing their presence in swampy areas where their installations are vulnerable. They are being replaced by smaller companies with less capital to spend, analysts say. Without investment in drilling and technology, even the best-endowed oil states will see their output dwindle. A case in point is troubled Venezuela, where, amid neglect of the industry, production has shrunk to relatively minuscule levels of less than 1 million barrels a day — less than one-tenth of Saudi Arabia’s output — despite claims to have the world’s largest reserves, about 300 billion barrels. Kuwait, a wealthy Persian Gulf oil state, has seen its capacity to produce decline about 18% over three years. Kamel al-Harami, a Kuwaiti analyst, said that the domestic industry “does not have the experience and the expertise to deal with old and aged oil fields” but that public opinion is resistant to bringing in international companies. Even Russia, which is roughly tied with Saudi Arabia as the leading producer in OPEC Plus, is close to the short-term limit of what it can produce, analysts say. Saudi Arabia, on the other hand, produces about 10% of the oil on the world’s market and could produce more. “Most OPEC producers are becoming capacity-constrained,” said Bill Farren-Price, director of intelligence at Enverus, an energy market research firm. “But Saudi Arabia is a different story. Its appetite for active oil market management is undiminished,” he added. Each month since the pandemic hit, OPEC Plus members have met to set output quotas. Following a schedule agreed to in July, the group plans to raise the overall output by 400,000 barrels a day each month, even though they are missing the targets. Stung by gasoline prices that have risen about 40% in the last year, the White House has leaned on the Saudis and their allies to go faster in opening up the throttle, but OPEC officials have so far been unwilling to lower the quotas of those who are not able to hit targets and reassign them to other countries. “We have to keep what they are allotted,” Prince Abdulaziz bin Salman, the Saudi oil minister, told journalists late last year. The alternative, he added, would be a monthly debate over “who gets what.” Analysts say Saudi officials do not want to unilaterally increase output and risk busting up the arrangement with other producers that gives them so much control. In addition, the lagging countries serve as a stealthy way to trim the cartel’s output, helping the Saudis enjoy high prices while increasing their own production. And time may not be on the side of the Biden administration and others urging more oil on the markets. As producers reach the limits of what they can make in the coming months, “it is going to be less and less impactful to demand that OPEC add more,” Bronze said.

Oil producers aren’t keeping up with demand, causing prices to stay high

OPEC reiterated its 2021 forecasts for world oil demand on Tuesday, as it nudged its predictions for global economic growth higher.

OPEC reiterates global oil demand forecast for 2021

Members of the OPEC group of oil producers and their allies met Wednesday and expressed confidence in prospects for a global economic recovery and attendant rise in crude oil demand.

"As mass vaccination programmes continue and the macro-economic situation improves, there is a growing optimism over global oil demand," Russian Deputy Prime Minister Alexander Novak was quoted by the Ria agency as saying.

He spoke during a videoconference meeting of OPEC+'s monthly Joint Ministerial Monitoring Committee (JMMC).

A statement published after the meeting said all participants were "optimistic" for a "year of recovery in 2021".

"The gradual rollout of vaccines around the world is a positive factor for the rest of the year, boosting the global economy and oil demand," the statement said.

That optimism has been reflected in oil markets since early November, with benchmark crude contracts now trading at around $60 (50 euros) per barrel -- levels last seen in early 2020.

Prices have also been supported by OPEC+ countries agreeing to production cuts in the wake of the coronavirus-induced plunge in demand last spring.

Those cuts have continued into 2021, with a reduction of 7.2 million barrels per day in January, 7.125 million bpd planned for February and 7.05 million bpd in March.

In addition OPEC mainstay Saudi Arabia has volunteered to a cut a million extra barrels per day from its production in February and March.

"The OPEC+ production strategy is working," said analyst Jeffrey Halley of Oanda.

Few analysts had expected a dramatic JMMC meeting Wednesday, with more heated discussion on the way forward possible at the next full OPEC+ ministerial meeting on March 4.

Members of the OPEC group of oil producers and their allies met Wednesday and expressed confidence in prospects for a global economic recovery and attendant rise in crude oil demand.

Members of the OPEC group of oil producers and their allies met Wednesday and expressed confidence in prospects for a global economic recovery and attendant rise in crude oil demand. "As mass vaccination programmes continue and the macro-economic situation improves, there is a growing optimism over global oil demand," Russian Deputy Prime Minister Alexander Novak was quoted by the Ria agency as saying. He spoke during a videoconference meeting of OPEC+'s monthly Joint Ministerial Monitoring Committee (JMMC). A statement published after the meeting said all participants were "optimistic" for a "year of recovery in 2021". "The gradual rollout of vaccines around the world is a positive factor for the rest of the year, boosting the global economy and oil demand," the statement said. That optimism has been reflected in oil markets since early November, with benchmark crude contracts now trading at around $60 (50 euros) per barrel -- levels last seen in early 2020. Prices have also been supported by OPEC+ countries agreeing to production cuts in the wake of the coronavirus-induced plunge in demand last spring. Those cuts have continued into 2021, with a reduction of 7.2 million barrels per day in January, 7.125 million bpd planned for February and 7.05 million bpd in March. In addition OPEC mainstay Saudi Arabia has volunteered to a cut a million extra barrels per day from its production in February and March. "The OPEC+ production strategy is working," said analyst Jeffrey Halley of Oanda. Few analysts had expected a dramatic JMMC meeting Wednesday, with more heated discussion on the way forward possible at the next full OPEC+ ministerial meeting on March 4.

OPEC+ 'optimistic' for 2021 rebound in oil demand

OPEC has said that the world oil demand will rebound more slowly in 2021 than previously thought as coronavirus cases rise.

OPEC cuts 2021 oil demand forecast: Oil demand to dip on rising coronavirus cases

COVID-19 has shattered many world-class economies and the worst hit are oil exporters. Saudi Arabia's foreign exchange reserves are depleting at the fastest rate. Watch report.

Saudi's reserves fall in fastest in 20 years | Forex reserves at a 9-year low

<a href="https://www.wionews.com/world/oil-rises-as-saudi-signals-opec-cuts-to-continue-under-new-minister-248572">OPEC</a> on Wednesday cut its forecast for growth in world <a href="https://www.wionews.com/business-economy/oil-edges-down-on-lower-demand-outlook-us-china-trade-dispute-242428">oil demand</a> in 2020 due to an economic slowdown, an outlook the producer group said highlighted the need for ongoing efforts to prevent a new glut of crude.

In a monthly report, the Organization of the Petroleum Exporting Countries said <a href="https://www.wionews.com/business-economy/oil-hits-six-week-high-on-hopes-of-extended-opec-output-cuts-248741">oil</a> demand worldwide would expand by 1.08 million barrels per day, 60,000 BPD&nbsp;less than previously estimated, and indicated the market would be in surplus.

The weaker outlook amid a <a href="https://www.wionews.com/photos/us-china-trade-war-in-10-dates-241155#march-8-2018-tax-on-steel-aluminium-241132">US-China trade war</a>&nbsp;and Brexit could press the case for OPEC and its allies to maintain or adjust their policy of cutting output.

Iraq said ministers would on Thursday discuss whether deeper cuts were needed.

OPEC, in the report, lowered its forecast for world economic growth in 2020 to 3.1 per cent&nbsp;from 3.2 per cent&nbsp;and said next year's increase in oil demand would be outpaced by "strong growth" in supply from rival producers such as the United States.

"This highlights the shared responsibility of all producing countries to support oil market stability to avoid unwanted volatility and a potential relapse into market imbalance," the report said.

OPEC, Russia and other producers have since January&nbsp;1 implemented a deal to cut output by 1.2 million BPD. The alliance, known as OPEC+, in July renewed the pact until March 2020 and a committee reviewing the pact meets on Thursday.

Oil prices pared an earlier gain after the report was released to sit just below $63 a barrel.

Despite the OPEC-led cut, oil has tumbled from April's 2019 peak above $75, pressured by trade concerns and an economic slowdown.

The report said oil inventories in industrialised economies fell in July, a development that could ease OPEC concern over a possible glut.

Even so, stocks in July exceeded the five-year average,&nbsp;a yardstick OPEC watches closely&nbsp;by 36 million barrels.

OPEC and its partners have been limiting supply since 2017, helping to clear a glut that built up in 2014-2016 when producers pumped at will, and revive prices.

The policy has given a sustained boost to US&nbsp;shale and other rival supply, and the report suggests the world will need less OPEC crude next year.

Demand for OPEC crude will average 29.40 million BPD in 2020, OPEC said, down 1.2 million BPD from this year.

OPEC said its oil output in August rose, however, by 136,000 bpd to 29.74 million BPD according to figures the group collects from secondary sources.

It was the first increase this year. <a href="https://www.wionews.com/business-economy/saudi-arabia-replaces-aramco-chairman-ahead-of-potential-ipo-247313">Saudi Arabia</a>, Iraq and Nigeria boosted supply.

Top exporter Saudi Arabia told OPEC that the kingdom raised August output by just over 200,000 BPD to 9.789 million BPD. Saudi Arabia continues to pump far less than its quota of 10.311 BPD.

Thanks in part to Saudi restraint, producers are still over-complying with the supply-cutting deal. Losses in Iran and Venezuela, two OPEC members facing US sanctions, have widened the supply reduction.

August's increase, however, puts OPEC output further above the 2020 demand forecast.

The report suggests there will be a 2020 supply surplus of 340,000 BPD if OPEC keeps pumping at August's rate and other things remain equal, more than the surplus forecast in last month's report.

OPEC on Wednesday cut its forecast for growth in world oil demand in 2020 due to an economic slowdown, an outlook the producer group said highlighted the need for ongoing efforts to prevent a new glut of crude.

OPEC on Wednesday cut its forecast for growth in world oil demand in 2020 due to an economic slowdown, an outlook the producer group said highlighted the need for ongoing efforts to prevent a new glut of crude. In a monthly report, the Organization of the Petroleum Exporting Countries said oil demand worldwide would expand by 1.08 million barrels per day, 60,000 BPD less than previously estimated, and indicated the market would be in surplus. The weaker outlook amid a US-China trade war and Brexit could press the case for OPEC and its allies to maintain or adjust their policy of cutting output. Iraq said ministers would on Thursday discuss whether deeper cuts were needed. OPEC, in the report, lowered its forecast for world economic growth in 2020 to 3.1 per cent from 3.2 per cent and said next year's increase in oil demand would be outpaced by "strong growth" in supply from rival producers such as the United States. "This highlights the shared responsibility of all producing countries to support oil market stability to avoid unwanted volatility and a potential relapse into market imbalance," the report said. OPEC, Russia and other producers have since January 1 implemented a deal to cut output by 1.2 million BPD. The alliance, known as OPEC+, in July renewed the pact until March 2020 and a committee reviewing the pact meets on Thursday. Oil prices pared an earlier gain after the report was released to sit just below $63 a barrel. Despite the OPEC-led cut, oil has tumbled from April's 2019 peak above $75, pressured by trade concerns and an economic slowdown. The report said oil inventories in industrialised economies fell in July, a development that could ease OPEC concern over a possible glut. Even so, stocks in July exceeded the five-year average, a yardstick OPEC watches closely by 36 million barrels. OPEC and its partners have been limiting supply since 2017, helping to clear a glut that built up in 2014-2016 when producers pumped at will, and revive prices. The policy has given a sustained boost to US shale and other rival supply, and the report suggests the world will need less OPEC crude next year. Demand for OPEC crude will average 29.40 million BPD in 2020, OPEC said, down 1.2 million BPD from this year. OPEC said its oil output in August rose, however, by 136,000 bpd to 29.74 million BPD according to figures the group collects from secondary sources. It was the first increase this year. Saudi Arabia, Iraq and Nigeria boosted supply. Top exporter Saudi Arabia told OPEC that the kingdom raised August output by just over 200,000 BPD to 9.789 million BPD. Saudi Arabia continues to pump far less than its quota of 10.311 BPD. Thanks in part to Saudi restraint, producers are still over-complying with the supply-cutting deal. Losses in Iran and Venezuela, two OPEC members facing US sanctions, have widened the supply reduction. August's increase, however, puts OPEC output further above the 2020 demand forecast. The report suggests there will be a 2020 supply surplus of 340,000 BPD if OPEC keeps pumping at August's rate and other things remain equal, more than the surplus forecast in last month's report.

OPEC cuts 2020 oil demand forecast, urges effort to avert a new glut

Oil prices rose on Wednesday after a reported sharp drop in US&nbsp;crude stocks and <a href="https://www.wionews.com/world/oil-rises-as-saudi-signals-opec-cuts-to-continue-under-new-minister-248572">OPEC</a>&nbsp;member Iraq said the producer group would discuss deepening output cuts amid ongoing demand concerns.

Brent crude gained 52 cents, or 0.8 per cent, to $62.90 a barrel by 1027 GMT, while US&nbsp;West Texas Intermediate rose 60 cents, or 1.1 per cent, to $58 a barrel.

Oil prices have risen more than 7 per cent this&nbsp;month, supported by declines in global inventories and signs of an easing in trade tensions between the United States and China, the world's two largest economies and energy consumers.

Prices rose this week after <a href="https://www.wionews.com/world/new-saudi-energy-minister-a-royal-with-decades-of-experience-in-opec-cuts-248719">Prince Abdulaziz bin Salman</a>, Saudi Arabia's new energy minister, said oil policy would not change and said an OPEC deal with Russia and other producers to cut output by 1.2 million barrels per day (BPD) would be maintained.

Iraqi Oil Minister Thamer Ghadhban said the Organization of the Petroleum Exporting Countries would discuss whether to deepen cuts when ministers meet on Thursday.

He said OPEC had discussed cuts of 1.6 million to 1.8 million BPD when considering output curbs last year.

Russia's Energy Minister Alexander Novak said an alliance of OPEC and other producers, known as OPEC+, would discuss global oil demand, but added that there were no fresh proposals to change production cut volumes.

<a href="https://www.wionews.com/business-economy/oil-hits-six-week-high-on-hopes-of-extended-opec-output-cuts-248741">OPEC cut</a> its forecast on Wednesday for growth in world oil demand in 2020 by 60,000 BPD to 1.08 million BPD, due to an economic slowdown.

It indicated the market would be in surplus.

The US Energy Information Administration (EIA) also slashed its demand forecasts this week.

Growing signs of a slowdown were flagged by oil traders and executives attending industry gatherings in Singapore and Abu Dhabi this week.

OPEC has pointed to rising global production next year, particularly in US shale fields, while data from the American Petroleum Institute (API) showed US&nbsp;crude stocks fell last week by 7.2 million barrels, more than twice the amount analysts in a Reuters poll had forecast.

"The API report is quite constructive for the oil market as it points to a tightening domestic oil market in the face of flat production and stronger demand," Dutch bank ING said.

The EIA's official numbers for US&nbsp;inventories will be released at 1430 GMT on Wednesday.

Oil prices rose on Wednesday after a reported sharp drop in US crude stocks and OPEC member Iraq said the producer group would discuss deepening output cuts amid ongoing demand concerns.

Oil prices rose on Wednesday after a reported sharp drop in US crude stocks and OPEC member Iraq said the producer group would discuss deepening output cuts amid ongoing demand concerns. Brent crude gained 52 cents, or 0.8 per cent, to $62.90 a barrel by 1027 GMT, while US West Texas Intermediate rose 60 cents, or 1.1 per cent, to $58 a barrel. Oil prices have risen more than 7 per cent this month, supported by declines in global inventories and signs of an easing in trade tensions between the United States and China, the world's two largest economies and energy consumers. Prices rose this week after Prince Abdulaziz bin Salman, Saudi Arabia's new energy minister, said oil policy would not change and said an OPEC deal with Russia and other producers to cut output by 1.2 million barrels per day (BPD) would be maintained. Iraqi Oil Minister Thamer Ghadhban said the Organization of the Petroleum Exporting Countries would discuss whether to deepen cuts when ministers meet on Thursday. He said OPEC had discussed cuts of 1.6 million to 1.8 million BPD when considering output curbs last year. Russia's Energy Minister Alexander Novak said an alliance of OPEC and other producers, known as OPEC+, would discuss global oil demand, but added that there were no fresh proposals to change production cut volumes. OPEC cut its forecast on Wednesday for growth in world oil demand in 2020 by 60,000 BPD to 1.08 million BPD, due to an economic slowdown. It indicated the market would be in surplus. The US Energy Information Administration (EIA) also slashed its demand forecasts this week. Growing signs of a slowdown were flagged by oil traders and executives attending industry gatherings in Singapore and Abu Dhabi this week. OPEC has pointed to rising global production next year, particularly in US shale fields, while data from the American Petroleum Institute (API) showed US crude stocks fell last week by 7.2 million barrels, more than twice the amount analysts in a Reuters poll had forecast. "The API report is quite constructive for the oil market as it points to a tightening domestic oil market in the face of flat production and stronger demand," Dutch bank ING said. The EIA's official numbers for US inventories will be released at 1430 GMT on Wednesday.

International oil prices gain after fall in US stocks

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