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More from Venezuela and Iran means smaller pie for Saudi

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SEB - analysbrev på råvaror

Production in Venezuela and Iran is on the rise and is set to rise further in the coming months and in 2024. Combined their production could grow by 0.8 m b/d YoY to 2024 (average year to average year). The IEA projected in its latest OMR (Oct-2023) that call-on-OPEC will fall to 28.3 m b/d in 2024, a decline of 0.5 m b/d. This combination would drive implied call-on-Saudi from 10.4 m b/d in 2023 to only 9.1 m b/d in 2024 and as low as 8.6 m b/d in Q1-24 if Saudi Arabia has to do all the heavy lifting alone. Wider core OPEC cooperation may be required.

Bjarne Schieldrop, Chief analyst commodities at SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

The IEA is out in the news today projecting peak oil demand this decade with global demand standing at no more than 102 m b/d towards the end of this decade. If so it would imply a call-on-Non-OPEC of only 66.4 m b/d in 2028 assuming that OPEC in general will demand a market share of 30 m b/d + NGL of 5.6 m b/d. The IEA (Oct-23) projects non-OPEC production to average 68.8 m b/d in 2024. That’s already 2.4 m b/d more than what would be sustainable over time if global oil demand is set to peak later this decade. Oil producers in general cannot have a production growth strategy in a peak oil demand world.

The US has decided to lift sanctions towards Venezuela for six months (18 April) as a measure to tempt it to move towards more democratic processes. And if it does, then the lifting of sanctions could continue after the 6 months. A primary opposition election took place this weekend with lawmaker Maria Corina Machado currently holding 93% of the vote count. Venezuela will next year hold a presidential election but fair play seems unlikely with Maduro in charge. The lifting of sanctions allows Venezuela’s PdV to resume exports to all destinations. Bans on new, foreign investments in the oil and gas sector are also lifted though Russian entities and JV’s are still barred.

Venezuela produced 0.8 m b/d in September and indicates that it can lift production by 0.2 m b/d by year and with more rigs and wells by 0.5 m b/d to 1.3 m b/d in the medium term.

Oil production in Iran has been on a steady rise since its low-point of 2.0 m b/d in 2020. Last year it produced 2.5 m b/d. In September it produced 3.1 m b/d, but Iran’s oil minister says production now is at 3.3 m b/d. Iran’s rising production and exports is not about the US being more lenient in its enforcement of sanctions towards Iran. It is more about Iran finding better ways to circumvent them but even more importantly that China is importing more and more oil from Iran.

Production by Iran and Venezuela is recovering. YoY production from the two could rise by close to 0.8 m b/d in 2024. This will lead to a decline in call-on-Saudi oil. 

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Oil production by Iran and Venezuela
Source: SEB graph and asessments, Blbrg data and news

The IEA estimated in its latest OMR report that call-on-OPEC will fall from 28.8 m b/d in 2023 to 28.3 m b/d in 2024. If all OPEC members except Saudi Arabia produces the same amount in 2024 as in 2023, then the need for Saudi Arabia’s oil (call-on-Saudi) will fall from a healthy 10.4 m b/d in 2023 to a still acceptable 9.9 m b/d in 2024. Its normal production is roughly 10 m b/d.

If however production by Iran and Venezuela rise by a combined 0.5 m b/d YoY in 2024, then call-on-Saudi will fall to 9.4 m b/d which is not so good but still manageable. But if Iran’s oil minister is correct when he says that its current production now is at 3.3 m b/d, then it is not far fetched to assume that Iran’s oil production may average maybe 3.4-3.5 m b/d in 2024. That would yield a YoY rise of 0.6 m b/d just for Iran. If we also assume that Venezuela manages to lift its production from 0.8 m b/d this year to 1.0 m b/d in 2024, then the combined growth from the two is closer to 0.8 m b/d. That would push call-on-Saudi down to only 9.1 m b/d which is not good at all. It would require Saudi Arabia to produce at its current production of 9.0 m b/d all through 2024.

The IEA further estimates that call-on-OPEC will average 27.7 m b/d in Q1-24. If we assume Iran @ 3.4 m b/d and Venezuela @ 1.0 m b/d then call-on-Saudi in Q1-24 will only be 8.6 m b/d. I.e. Saudi Arabia will have to cut production further to 8.6 m b/d in Q1-24. At that point Saudi Arabia will likely need or like other core OPEC members like Iraq, Kuwait and UAE as well as Russia to join in.

Implied call-on-Saudi. Call-on-OPEC is set to decline from 28.8 m b/d to 28.3 m b/d to 2024. If all OPEC members produced the same in 2024 as in 2023 then call-on-Saudi would fall by 0.5 m b/d to 9.9 m b/d. But if Venezuela and Iran increases their combined production by 0.8 m b/d YoY in 2024 then call-on-Saudi falls to 9.1 m b/d.

Implied call-on-Saudi.
Source: SEB graph and calculations, IEA data

If we look a little broader on this topic and also include Libya, Nigeria and Angola we see that this group of OPEC members produced 11.4 m b/d in 2010, 10.1 m b/d in 2017 and only 5.1 m b/d at the low-point in August 2020. The decline by these OPEC members has of course the other OPEC and OPEC+ members to stem the rising flood of US shale oil production. The production from this unfortunate group of OPEC-laggards is however now on the rise reaching 7.5 m b/d in September. With more from Iran and Venezuela it could rise to 8.0 m b/d in 2024. Production from Nigeria and Angola though still looks to be in gradual decline while Libya looks more sideways. So for the time being it is all about the revival of Iran and Venezuela.

The unfortunate OPEC-laggards had a production of 11.4 m b/d in 2010. But production then fell to only 5.1 m b/d in August 2020. It helped the rest of OPEC’s members to manage the huge increase in US shale oil production. Production from these countries are now on the rebound. Though Nigeria and Angola still seems to be in gradual decline.

Oil production of some OPEC countries
Source: SEB graph, Blbrg data

What everyone needs to be attentive to is that call-on-OPEC and even more importantly call-on-Saudi can only erode to a limit before Saudi/OPEC/Russia will have to take action. Especially if the forecast for needed oil from OPEC/Saudi for the nearest 2-3 years is in significant decline. Then they will have to take action in the sense that they stop defending the price and allows the price to fall sharply along with higher production. And yet again it is US shale oil producers who will have to take the brunt of the pain. They are the only oil producers in the world who can naturally and significantly reduce their production rather quickly. I.e. the US shale oil players will have to be punished into obedience, if possible, yet one more time.

We don’t think that it is any immediate risk for this to happen as US shale oil activity is slowing while global oil demand has rebounded following Covid-lockdowns. But one needs to keep a watch on projections for call-on-OPEC and call-on-Saudi stretching 1-2-3 years forward on a continuous basis. 

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In its medium term oil market outlook, Oil2023, the IEA projected a fairly healthy development for call-on-OPEC to 2028. First bottoming out at 29.4 m b/d in 2024 before rising gradually to 30.6 m b/d in 2028. The basis for this was a slowing though steady rise in global oil demand to 105.7 m b/d in 2028 together with stagnant non-OPEC production due to muted capex spending over the past decade. But this projection has already been significantly dented and reduced in IEA’s latest OMR from October where call-on-OPEC for 2024 is projected at only 28.3 m b/d.

In a statement today the IEA projects that global oil demand will peak this decade and consume no more than 102 m b/d in the late 2020ies due to (in large part) rapid growth in EV sales. This would imply a call-on-OPEC of only 26.9 m b/d in 2028. It is not a viable path for OPEC to produce only 26.9 m b/d in 2028. Especially if production by Iran and Venezuela is set to revive. I.e. OPEC’s pie is shrinking while at the same time Iran and Venezuela is producing more. In this outlook something will have to give and it is not OPEC. 

One should here turn this on its head and assume that OPEC will produce 30 m b/d in 2028. Add OPEC NGLs of 5.6 m b/d and we get 35.6 m b/d. If global oil demand in 2028 stands at only 102 m b/d then call-on-Non-OPEC equates to 66.4 m b/d. That is 3.1 m b/d less than IEA’s non-OPEC production projection for 2028 of 69.5 m b/d but also higher than non-OPEC production projection of 68.8 m b/d (IEA, Oct-23) is already 2.4 m b/d too high versus what is a sustainable level.

What this of course naturally means is that oil producers in general cannot have production growth as a strategy in a peak-oil-demand-world with non-OPEC in 2024 already at 2.4 m b/d above its sustainable level.

The US is set to growth its hydrocarbon liquids by 0.5 m b/d YoY in 2024. But in a zero oil demand growth world that is way, way too much.

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Call-on-OPEC

Analys

Brent crude inching higher on optimism that US inflationary pressures are fading

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SEB - analysbrev på råvaror
Bjarne Schieldrop, Chief analyst commodities, SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

Brent crude price inching higher on optimistic that US inflationary pressures are fading. Brent crude closed up 1.1 USD/b ydy to a close of USD 86.39/b which was the highest close since the end of April. This morning it is trading up another half percent to USD 86.9/b along with comparable gains in industrial metals and Asian equities. At 14:30 CET the US will publish its preferred inflation gauge, the PCE figure. Recent data showed softer US personal spending in Q1. Expectations are now high that the PCE inflation number for May will show fading inflationary pressures in the US economy thus lifting the probability for rate cuts later this year which of course is positive for the economy and markets in general and thus positive for oil demand and oil prices. Hopes are high for sure.

Brent crude is trading at the highest since the end of April

Brent crude is trading at the highest since the end of April
Source: Blbrg

The rally in Brent crude since early June is counter to rising US oil inventories and as such a bit puzzling to the market.

US commercial crude and oil product stocks excluding SPR. 

US commercial crude and oil product stocks excluding SPR. 
Source: SEB graph and highlights, Blbrg data feed, US EIA data

Actual US crude oil production data for April will be published later today. Zero growth in April is likely. Later today the US EIA will publish actual production data for US crude and liquids production for April. Estimates based on US DPR and DUC data indicates that there will indeed be zero growth in US crude oil production MoM in April. This will likely driving home the message that there is no growth in US crude oil production despite a Brent crude oil price of USD 83/b over the past 12 mths. The extension of this is of course rising expectations that there will be no growth in US crude oil production for the coming 12 months either as long as Brent crude hoovers around USD 85/b.

US production breaking a pattern since Jan 2014. No growth at USD 83/b. What stands out when graphing crude oil prices versus growth/decline in US crude oil production is that since January 2014 we have not seen a single month that US crude oil production is steady state or declining when the Brent crude oil price has been averaging USD 70.5/b or higher.

US Senate looking into the possibility that US shale oil producers are now colluding by holding back on investments, thus helping to keep prices leveled around USD 85/b.

Brent crude 12mth rolling average price vs 4mth/4mth change in US crude oil production. Scatter plot of data starting Jan 2014. Large red dot is if there is no change in US crude oil production from March to April. Orange dots are data since Jan 2023. The dot with ”-1.3%” is the March data point. 

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Brent crude 12mth rolling average price vs 4mth/4mth change in US crude oil production.
Source:  SEB graph and highlights, Blbrg data feed, US EIA

Brent crude 12mth rolling average price vs 4mth/4mth change in US crude oil production. Data starting Jan 2014. The last data point is if there is no change in US crude oil production from March to April.

Brent crude 12mth rolling average price vs 4mth/4mth change in US crude oil production.
Source:  SEB graph and highlights, Blbrg data feed, US EIA
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Analys

Price forecast update: Weaker green forces in the EU Parliament implies softer EUA prices

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SEB - analysbrev på råvaror
Bjarne Schieldrop, Chief analyst commodities, SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

We reduce our forecast for EUA prices to 2030 by 10% to reflect the weakened green political agenda in the EU Parliament following the election for the Parliament on 6-9 June. The upcoming election in France on 7 July is an additional risk to the political stability of EU and thus in part also to the solidity of the blocks green agenda. Environmental targets for 2035 and 2040 are most at risk of being weakened on the margin. EUA prices for the coming years to 2030 relate to post-2030 EUA prices through the bankability mechanism. Lower post-2030 climate ambitions and lower post-2030 EUA prices thus have a bearish impact on EUA prices running up to 2030. Actual softening of post-2030 climate ambitions by the EU Parliament have yet to materialize. But when/if they do, a more specific analysis for the consequences for prices can be carried out.

EUA prices broke with its relationship with nat gas prices following the EU Parliament election. The EUA price has dutifully followed the TTF nat gas price higher since they both bottomed out on 23 Feb this year. The EUA front-month price bottomed out with a closing price of EUR 50.63/ton on 23 Feb. It then reached a recent peak of EUR 74.66/ton on 21 May as nat gas prices spiked. Strong relationship between EUA prices and nat gas prices all the way. Then came the EU Parliament election on 6-9 June. Since then the EUA price and TTF nat gas prices have started to depart. Bullish nat gas prices are no longer a simple predictor for bullish EUA prices.

The front-month EUA price vs the front-year TTF nat gas price. Hand in hand until the latest EU Parliament election. Then departing.

The front-month EUA price vs the front-year TTF nat gas price. Hand in hand until the latest EU Parliament election. Then departing.
Source: SEB graph and highlights, Blbrg data

The EU Parliament election on 6-9 June was a big backlash for the Greens. The Greens experienced an euphoric victory in the 2019 election when they moved from 52 seats to 74 seats in the Parliament. Since then we have had an energy crisis with astronomic power and nat gas prices, rampant inflation and angry consumers being hurt by it all. In the recent election the Greens in the EU Parliament fell back to 53 seats. Close to where they were before 2019.

While green politics and CO2 prices may have gotten a lot of blame for the pain from energy prices over the latest 2-3 years, the explosion in nat gas prices are largely to blame. But German green policies to replace gas and oil heaters with heat pumps and new environmental regulations for EU farmers are also to blame for the recent pullback in green seats in the Parliament.

Green deal is still alive, but it may not be fully kicking any more. Existing Green laws may be hard to undo, but targets for 2035 and 2040 will be decided upon over the coming five years and will likely be weakened.

At heart the EU ETS system is a political system. As such the EUA price is a politically set price. It rests on the political consensus for environmental priorities on aggregate in EU.

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The changes to the EU Parliament will likely weaken post-2030 environmental targets. The changes to the EU Parliament may not change the supply/demand balance for EUAs from now to 2030. But it will likely weaken post-2030 environmental targets and and thus projected EU ETS balances and EUA prices post-2030. And through the bankability mechanism this will necessarily impact EUA prices for the years from now to 2030.

Weaker post-2030 ambitions, targets and prices implies weaker EUA prices to 2030. EUA prices are ”bankable”. You can buy them today and hold on to them and sell them in 2030 or 2035. The value of an EUA today fundamentally rests on expected EUA prices for 2030/35. These again depends on EU green policies for the post 2030 period. Much of these policies will be ironed out and decided over the coming five years. 

Weakening of post-2030 targets have yet to materialize. But just talking about it is a cold shower for EUAs. These likely coming weakenings in post-2030 environmental targets and how they will impact EUA prices post 2030 and thus EUA prices from now to 2030 are hard to quantify. But what is clear to say is that when politicians shift their priorities away from the environment and reduce their ambitions for environmental targets post-2030 it’s like a cold shower for EUA prices already today.

On top of this we now also have snap elections in the UK on 4 July and in France on 7 July with the latter having the potential to ”trigger the next euro crisis” according to Gideon Rachman in a recent article in FT.

What’s to be considered a fair outlook for EUA prices for the coming five years in this new political landscape with fundamentally changed political priorities remains to be settled. But that EUA price outlooks will be lowered versus previous forecasts is almost certain.

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We reduce our EUA price forecast to 2030 by 10% to reflect the new political realities. To start with we reduce our EUA price outlook by 10% from 2025 to 2030 to reflect the weakened Green agenda in the EU parliament.

SEB’s EUA price forecast, BNEF price forecasts and current market prices in EUR/MWh

SEB's EUA price forecast, BNEF price forecasts and current market prices in EUR/MWh
Source: SEB graph and highlights and forecast, BNEF data and forecasts
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The most important data point in the global oil market will be published on Friday 28 June

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SEB - analysbrev på råvaror
Bjarne Schieldrop, Chief analyst commodities, SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

US crude oil production has been booming for more than a decade. Interrupted by two setbacks in response to sharp price declines. The US boom has created large waves in the global oil market and made life very difficult for OPEC(+). Brent crude has not traded below USD 70/b since Dec-2021 and over the past year, it has averaged USD 84/b. US shale oil production would typically boom with such a price level historically. However, there has been zero growth in US crude oil production from Sep-2023 to Mar-2024. This may be partially due to a cold US winter, but something fundamentally seems to have changed. We recently visited a range of US E&P and oil services companies in Houston. The general view was that there would be zero growth in US crude oil production YoY to May 2025. If so and if it also is a general shift to sideways US crude oil production beyond that point, it will be a tremendous shift for the global oil market. It will massively improve the position of OPEC+. It will also sharply change our perception of the forever booming US shale oil supply. But ”the proof is in the pudding” and that is data. More specifically the US monthly, controlled oil production data is to be published on Friday 28 June.

The most important data point in the global oil market will be published on Friday 28 June. The US EIA will then publish its monthly revised and controlled oil production data for April. Following years of booming growth, the US crude oil production has now gone sideways from September 2023 to March 2024. Is this a temporary blip in the growth curve due to a hard and cold US winter or is it the early signs of a huge, fundamental shift where US crude oil production moves from a decade of booming growth to flat-lining horizontal production?

We recently visited a range of E&P and oil services companies in Houston. The general view there was that US crude oil production will be no higher in May 2025 than it is in May 2024. I.e. zero growth.

It may sound undramatic, but if it plays out it is a huge change for the global oil market. It will significantly strengthen the position of OPEC+ and its ability to steer the oil price to a suitable level of its choosing.

The data point on Friday will tell us more about whether the companies we met are correct in their assessment of non-growth in the coming 12 months or whether production growth will accelerate yet again following a slowdown during winter.

The US releases weekly estimates for its crude oil production but these are rough, temporary estimates. The market was fooled by these weekly numbers last year when the weekly numbers pointed to a steady production of around 12.2 m b/d from March to July while actual monthly data, with a substantial lag in publishing, showed that production was rising strongly.

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The real data are the monthly, controlled data. These data will be the ”proof of the pudding” of whether US shale oil production now is about to shift from a decade of booming growth to instead flat-line sideways or whether it will drift gradually higher as projected by the US EIA in its latest Short-Term Energy Outlook.

US crude oil production given by weekly data and monthly data. Note that the monthly, controlled data comes with a significant lag. The market was thus navigating along the weekly data which showed ”sideways at 12.2 m b/d” for a significant period last year until actual data showed otherwise with a time-lag.

US crude oil production given by weekly data and monthly data.
Source: SEB graph and highlights, Blbrg data feed, EIA data

If we add in Natural Gas Liquids and zoom out to include history back to 2001 we see an almost uninterrupted boom in supply since Sep 2011 with a few setbacks. At first glance, this graph gives little support to a belief that US crude oil production now suddenly will go sideways. Simple extrapolation of the graph indicates growth, growth, growth.

US crude and liquids production has boomed since September 2011

US crude and liquids production has boomed since September 2011
Source: SEB graph and highlights, Blbrg data feed, US EIA data

However. The latest actual data point for US crude oil production is for March with a reading of 13.18 m b/d. What stands out is that production then was still below the September level of 13.25 m b/d.

The world has gotten used to forever growing US crude oil production due to the US shale oil revolution, with shorter periods of sharp production declines as a result of sharp price declines.

But the Brent crude oil price hasn’t collapsed. Instead, it is trading solidly in the range of USD 70-80-90/b. The front-month Brent crude oil contract hasn’t closed below USD 70/b since December 2021.

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Experiences from the last 15 years would imply wild production growth and activity in US shale oil production at current crude oil prices. But US crude oil production has now basically gone sideways to lower from September to March.

The big, big question is thus: Are we now witnessing the early innings of a big change in US shale oil production where we shift from booming growth to flat-lining of production?

If we zoom in we can see that US liquids production has flat-lined since September 2023. Is the flat-lining from Sep to Mar due to the cold winter so that we’ll see a revival into spring and summer or are we witnessing the early signs of a huge change in the global oil market where US crude oil production goes from booming growth to flat-line production.

US liquids production has flat-lined since September 2023.
Source: SEB graph and highlights, Blbrg data feed, US EIA data

The message from Houston was that there will be no growth in US crude oil production until May 2025. SEB recently visited oil and gas producers and services providers in Houston to take the pulse of the oil and gas business. Especially so the US shale oil and shale gas business. What we found was an unusually homogeneous view among the companies we met concerning both the state of the situation and the outlook. The sentiment was kind of peculiar. Everybody was making money and was kind of happy about that, but there was no enthusiasm as the growth and boom years were gone. The unanimous view was that US crude oil production would be no higher one year from now than it is today. I.e. flat-lining from here.

The arguments for flat-lining of US crude oil production here onward were many.

1) The shale oil business has ”grown up” and matured with a focus on profits rather than growth for the sake of growth.

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2) Bankruptcies and M&As have consolidated the shale oil companies into larger, fewer public companies now accounting for up to 75% of total production. Investors in these companies have little interest/appetite for growth after having burned their fingers during a decade and a half of capital destruction. These investors may also be skeptical of the longevity of the US shale oil business. Better to fully utilize the current shale oil infrastructure steadily over the coming years and return profits to shareholders than to invest in yet more infrastructure capacity and growth.

3) The remaining 25% of shale oil producers which are in private hands have limited scope for growth as they lack pipeline capacity for bringing more crude oil from field to market. Associated nat gas production is also a problem/bottleneck as flaring is forbidden in many places and pipes to transport nat gas from field to market are limited.

4) The low-hanging fruits of volume productivity have been harvested. Drilling and fracking are now mostly running 24/7 and most new wells today are all ”long wells” of around 3 miles. So hard to shave off yet another day in terms of ”drilling yet faster” and the length of the wells has increasingly reached their natural optimal length.

5) The average ”rock quality” of wells drilled in the US in 2024 will be of slightly lower quality than in 2023 and 2025 will be slightly lower quality than 2024. That is not to say that the US, or more specifically the Permian basin, is quickly running out of shale oil resources. But this will be a slight headwind. There is also an increasing insight into the fact that US shale oil resources are indeed finite and that it is now time to harvest values over the coming 5-10 years. One company we met in Houston argued that US shale oil production would now move sideways for 6-7 years and then overall production decline would set in.

The US shale oil revolution can be divided into three main phases. Each phase is probably equally revolutionary as the other in terms of impact on the global oil market.

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1) The boom phase. It started after 2008 but didn’t accelerate in force before the ”Arab Spring” erupted and drove the oil price to USD 110/b from 2011 to 2014. It was talked down time and time again, but it continued to boom and re-boom to the point that today it is almost impossible to envision that it won’t just continue to boom or at least grow forever.

2) The plateau phase. The low-hanging fruits of productivity growth have been harvested. The highest quality resources have been utilized. The halfway point of resources has been extracted. Consolidation, normalization, and maturity of the business has been reached. Production goes sideways.

3) The decline phase. Eventually, the resources will have been extracted to the point that production unavoidably starts to decline.

Moving from phase one to phase two may be almost as shocking for the oil market as the experience of phase 1. The discussions we had with oil producers and services companies in Houston may indicate that we may now be moving from phase one to phase two. That there will be zero shale oil production growth YoY in 2025 and that production then may go sideways for 6-7 years before phase three sets in.

US EIA June STEO report with EIA’s projection for US crude oil production to Dec-2025. Softer growth, but still growth.

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US EIA June STEO report with EIA's projection for US crude oil production to Dec-2025. Softer growth, but still growth.
Source: SEB graph and highlights, US EIA data

US EIA June STEO report with YoY outlook growth for 2025. Projects that US crude production will grow by 0.47 m b/d YoY in 2025 and that total liquids will grow by 720 k b/d YoY.

US EIA June STEO report with YoY outlook growth for 2025. Projects that US crude production will grow by 0.47 m b/d YoY in 2025 and that total liquids will grow by 720 k b/d YoY.
Source: SEB graph and calculations, US EIA data

US EIA June STEO report with outlook for production growth by country in 2025. This shows how big the US production growth of 0.7 m b/d YoY really is compared to other producers around the world

US EIA June STEO report with outlook for production growth by country in 2025. This shows how big the US production growth of 0.7 m b/d YoY really is compared to other producers around the world
Source: SEB graph and highlights, US EIA data

US EIA June STEO report with projected global growth in supply and demand YoY in 2025. Solid demand growth, but even strong supply growth with little room for OPEC+ to expand. Production growth by non-OPEC+ will basically cover global oil demand growth. 

US EIA June STEO report with projected global growth in supply and demand YoY in 2025. Solid demand growth, but even strong supply growth with little room for OPEC+ to expand. Production growth by non-OPEC+ will basically cover global oil demand growth.
Source: SEB graph and highlights, US EIA data

But if there instead is zero growth in US crude oil production in 2025 and the US liquids production only grows by 0.25 m b/d YoY due to NGLs and biofuels, then suddenly there is room for OPEC+ to put some of its current production cuts back into the market. Thus growth/no-growth in US shale oil production will be of huge importance for OPEC+ in 2025. If there is no growth in US shale oil then  OPEC+ will have a much better position to control the oil price to where it wants it.

US crude production
Source: SEB graph and highlights, US EIA data

US crude oil production and drilling rig count

US crude oil production and drilling rig count
Source: SEB graph, Blbrg data, EIA data
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