Analysis and Prospect on Global Oil Supply Under the Production Reduction of OPEC+

Abstract

AbstractIn 2020, the global oil supply has experienced the largest decline in history due to the COVID-19. “OPEC+” oil producers have reached the largest production reduction agreement in history, and the effect on limiting production to ensure price is obvious. The political upheaval in countries with exemption for production reduction, such as Libya, has led to a sharp decline in production. Non-OPEC oil producers cut their capital expenditure sharply, and shale oil producers of the US received great impact. The crude oil production of oil producers such as Brazil and Canada declined. The global oil supply will bottom out in 2021. “OPEC+” oil producers are expected to relax production reduction quotas by stages and will still play important roles as market regulators. With the recovery of oil prices, shale oil production of the US is expected to recover, and other non-OPEC oil producers will release their growth potential. In the medium and long term, the global production of medium crude oil is faster, and the price difference between light and heavy crude oil will remain narrow. Major oil producers still have great growth potential, and the world is entering an era of oil oversupply.KeywordsOil SupplyOPEC + Shale OilPolitical UpheavalCapital Return