Why OPEC Can’t Afford to Reverse Oil Output Cuts

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Why OPEC Can’t Afford to Reverse Oil Output Cuts
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Rising oil production in the US, Guyana, and Brazil is challenging OPEC's ability to reverse its output cuts.

OPEC is unlikely to reverse any of the production cuts that it approved last year as growing production from non-cartel countries is on the rise, pressuring prices. To date, OPEC cannot afford to bring a single barrel back to the market, especially as it continues dealing with members that do not stay within their quotas. A bigger threat, however, is growing production in the United States, Guyana, and Brazil, according to BP’s Dale.

Oil demand is the crucial factor for production plans, of course, both among OPEC members and non-OPEC producers—and it does not guarantee continuous strong growth. Brazil, for instance, saw its oil output add 13% last year to a record high of over 3.4 million barrels daily. This year, however, production growth has wobbled, and in April, the total fell back to some 3.1 million barrels daily.to 4.

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