Non-OPEC+ Surge Caps Oil Prices, Challenges OPEC+

Analysts suggest oil prices are unlikely to reach $100 a barrel next year, with American output and exports exceeding expectations. Despite OPEC+'s efforts to control supply through cuts, especially for Q1 2024, the alliance is struggling to maintain market share and prop up prices against this robust external supply.

The group holds substantial spare capacity, estimated at 5.5 million barrels per day by ING, which acts as a ceiling on price upside and could be unleashed to flood the market if cuts are unwound, potentially crashing prices by 30-50% according to Citigroup. The International Energy Agency notes that U.S. production growth accounts for two-thirds of non-OPEC+ expansion in 2023, while OPEC+'s market share is at its lowest since 2016.

While ING forecasts Brent crude in the low $80s early next year, averaging $91 in H2 2024 as the market returns to deficit, the long-term outlook suggests OPEC+ will require "continually unified, vigilant, and effective supply management" for several years to prevent a price collapse, even as a price boom is anticipated towards the end of the decade.