OPEC+ scrambles as non-OPEC producers begin to dominate growing oil market
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The Organization of Petroleum Exporting Countries (OPEC) and its allies in the expanded OPEC+ alliance, including Russia, face an increasingly grim reality: the global oil market is faltering. Declining demand, particularly in China, combined with booming supplies from non-OPEC producers, is forcing OPEC+ to make difficult decisions about its future.
At a virtual meeting last Thursday, OPEC+ announced another delay in its planned revival of halted oil production, marking the third deferral since 2022. The group continues to hold 2.2 million barrels per day of output offline, originally scheduled to return to the market by December 2023. The new timeline pushes this restoration back to April 2025, with gradual increases through September 2026.
This decision highlights the fragile state of the market. Demand from China, the world’s largest crude importer, has slowed significantly, creating ripple effects throughout the industry. At the same time, non-OPEC producers, including Canada, are stepping up to fill the supply gap. Alberta, home to Canada’s oil sands, has played a crucial role in increasing global production. Along with the U.S., Brazil, and Guyana, Canada is emerging as a key player in the shifting energy landscape. Bank of America projects that non-OPEC producers will capture 75 per cent of global demand growth by 2030, further eroding OPEC+’s market dominance.
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Oil prices mirror the uncertainty. Since July, prices have plunged 18 per cent, with Brent crude trading near US$72 a barrel. Analysts at Citigroup and JPMorgan forecast prices could dip further into the US$60 range next year. For OPEC+ member states heavily reliant on oil revenues, such a scenario is deeply concerning. Saudi Arabia, for example, needs oil prices above US$80 a barrel to balance its budget, making current levels unsustainable.
OPEC+’s recent production delay was an attempt to stabilize prices, but it has yet to restore confidence. The UAE’s postponed baseline quota increase and other measures have done little to reverse the downward trend. Analysts have noted that markets remain unconvinced of any imminent recovery, underscoring the challenges ahead.
This isn’t the first time OPEC+ has faced such headwinds. During the 2014 to 2016 oil price collapse, the group flooded the market with crude in an attempt to undercut U.S. shale producers. The move led to prolonged price lows and significant economic pain for member nations, serving as a cautionary tale. Speculation is now mounting that Saudi Arabia may consider another price war to regain market share and assert its dominance. While such a move carries significant risks, OPEC+ may see it as a necessary step to counter the growing influence of non-OPEC producers.
For many OPEC+ nations, oil revenues are the backbone of their economies. Countries like Nigeria and Venezuela, already struggling with economic crises, are particularly vulnerable to prolonged price declines. Without significant reforms or external support, these nations risk further instability. Meanwhile, non-OPEC producers, including Canada, continue to benefit from their growing market share. Alberta’s oil sands have contributed significantly to Canada’s status as a global energy supplier, helping drive economic growth in the province.
However, the broader energy landscape is shifting. Renewable energy adoption and climate policies in major markets such as the European Union and the U.S. are reducing long-term demand for crude. Canada is not immune to these pressures. While Alberta remains a major producer, its energy sector faces increasing calls to balance production growth with environmental sustainability and climate goals.
OPEC+ is at a crossroads. It must address not only the immediate challenges of falling prices and declining demand but also navigate a global energy transition that threatens to reshape the market. While its cautious approach to restoring production buys time, it underscores the urgency of finding a long-term strategy to maintain relevance in a changing world.
The choices OPEC+ makes in the coming months will have far-reaching consequences for its members, its competitors, and the future of the global energy market. Whether through diversification, strategic partnerships, or technological investments, OPEC must adapt to secure its future.
The clock is ticking.
Toronto-based Rashid Husain Syed is a highly-regarded analyst specializing in energy and politics, with a particular emphasis on the Middle East. Besides his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.
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