OPEC in Competition for Market Share

The profound transformation of the world oil market and its transition to a new development regime has stimulated leading oil producers in OPEC and OPEC+ to take a risky decision and start the accelerated return of significant volumes of oil to the market in 2025. The increase in oil supply is being implemented when the world oil market is oversupplied and against the backdrop of sluggish dynamics of global demand for oil. However, at stake is the configuration of the global oil supply and the position of oil-exporting countries in this supply in the medium and long term. Competition for a place in the global oil supply in the next five to ten years has intensified. The imperative is to ensure a market niche here and now. In just a couple of years, with the slowing growth of global oil demand and the high probability of reaching a peak in global oil demand, changing a country’s position in the global oil supply will require extraordinary efforts and resources. The decision by the OPEC+ eight to increase oil production has opened up the opportunity for Saudi Arabia, the UAE, Kuwait, Bahrain and Oman to redistribute in their favor those shares of the oil supply that, for various reasons, their partners in OPEC and OPEC+ are losing. In the medium term, the main factor motivating the Gulf countries, which have significant spare oil production capacities, to increase their production in a situation of supply overhang over demand is the challenge from third countries, including OPEC and OPEC+ members. More and more countries globally expand cooperation with leading global oil companies in order to quickly monetize their hydrocarbon reserves. The current situation in the global oil market and in the global economy and politics allows to the OPEC+ eight, or more precisely Saudi Arabia and its allies in the Gulf, to increase production in small steps. Depending on such poorly predictable factors as the dynamics of tight oil production in the US, the state of the oil sector in Iran, which remains in a situation of acute conflict with Israel, the dynamics of production in Iraq, Nigeria, Libya and Angola, as well as the Gulf partners in OPEC+, key OPEC producers are preparing to realize a variety of scenarios for taking a share of the global oil supply through increased investment and have relatively good chances of achieving serious success in the competition for this share.