OPEC+ has long been a central player in global oil markets, but recent analysis by global energy market expert Vandana Hari suggest that while the oil-producing cartel has managed to maintain cohesion, its ability to drive prices significantly higher is becoming increasingly limited.
The Organization of the Petroleum Exporting Countries (OPEC), in alliance with top non-OPEC oil-exporting nations, formed the OPEC+ group in 2016. Since then, OPEC+ has played a pivotal role in stabilizing and influencing global oil prices through production cuts and strategic adjustments.
However, Hari, the founder of Vanda Insights, a global energy consultancy, argued that despite OPEC+’s efforts, the cartel lacks the capacity to dramatically push oil prices beyond certain levels.
While the global oil market often focuses on the policies of major oil producers like OPEC+, Hari believes that one of the most important takeaways is the group’s ability to remain cohesive despite ongoing market speculation.
“I think that is where the market attention is focused because that’s the variable. With OPEC+, we’ve seen three postponements of the unwinding of the 2.2 million barrels per day.
“What that tells me is that OPEC+ despite all the talks in the market speculation is managing to remain cohesive.”
Vandana Hari, Global Energy Market Expert
Despite rumors and speculations about potential divisions within the group, OPEC+ has largely succeeded in maintaining unity. However, Hari stresses that the group’s power to elevate oil prices remains constrained.
OPEC+ has repeatedly reduced its collective output to bolster global prices, particularly during times of market volatility. The strategy has been especially crucial as demand fluctuates, largely due to global economic conditions and geopolitical developments.
However, Hari suggested that the current price levels may represent the ceiling for OPEC+’s influence, pointing out that pushing oil prices higher could have unintended consequences.
“The eight members that are cutting these 2.2 million barrels per day are showing that they are willing to be patient,” Hari added. However, she explained that this patience likely reflects their understanding that they cannot sustain prices at much higher levels without risking further market imbalances.
“My own perspective will be that OPEC+ will remain patient. I think they will try and put a floor or maintain a floor around $70 Brent.
“I think that is the most they can do or the least they can do in their view. They really don’t have the bandwidth to prop prices much higher.”
Vandana Hari, Global Energy Market Expert
US Production Growth Remains Modest
While much of the market’s attention is centered on OPEC+, the United States has emerged as another important player in global oil production.
Despite speculation about changes in U.S. energy policy, particularly with the incoming administration of President-elect Trump, Hari argued that U.S. oil producers are unlikely to change their strategies significantly.
She pointed to the U.S. oil production growth this year, which has been much slower than in previous years.
“US oil production this year has grown by an estimated 300,000 barrels per day, a sharp decrease compared to the nearly 1 million barrels per day growth seen last year,” she explained. This trend is expected to continue, with a projected growth rate of around 300,000 bpd in the coming year as well.
Hari emphasized that this slower pace of growth is unlikely to shift significantly, as U.S. oil producers continue to focus on capital discipline and technology to optimize production rather than ramping up drilling to meet price incentives.
Beyond the United States, other countries are expected to contribute to growing global oil supplies. Hari highlighted several nations where oil production is projected to increase, including Canada, Brazil, Argentina, Guyana, and Norway.
“Of course, it’s very price-sensitive. We have to keep that in mind. So as long as WTI stays well above $65 or around $70 a barrel, that’s what we are going to see,” Hari said.
While OPEC+ remains a critical player in the global energy market, Vandana Hari’s insights suggest that its power to push oil prices significantly higher is limited.
The group’s cautious approach, combined with growing oil production from outside the cartel, points to a future where stability and moderate price levels are the primary focus.
As market dynamics evolve, OPEC+ will likely continue to adapt its strategies to maintain a delicate balance between price stability and production control.
READ ALSO: Biden Commutes Almost All Federal Death Sentences
