Oil production from the Middle East has climbed to a record while U.S. output slumps, the International Energy Agency says, in a sign that OPEC’s strategy of defending its market share is succeeding.
Bloomberg reports that Middle Eastern output exceeded 31 million barrels a day for a third month in June amid near-record supply from Saudi Arabia, while U.S. oil production slid 140,000 barrels a day to 12.45 million, the agency says in its monthly market report.
The IEA, which mostly kept forecasts for supply and demand unchanged, also says that while the rebalancing of the oil market is progressing, brimming inventories remain “a threat to the recent stability of oil prices.”
“When U.S. shale production was moving upwards very fast it became fashionable to talk of lower reliance on traditional suppliers,” the Paris-based IEA says. The Middle East’s resurgence is “an eloquent reminder that even when U.S. shale production does resume its growth, older producers will remain essential for oil markets.”
Oil has recovered more than 70% from the 12-year low reached in January as Saudi Arabia’s strategy to pressure OPEC’s rivals succeeds in reversing the U.S. shale oil boom. Elevated output from the Middle East has pushed the region’s share of world supplies to 35%, the highest since the late 1970s, according to the IEA.
Production from the Organization of Petroleum Exporting Countries climbed to an eight-year high last month, boosted by the readmission of Gabon, which swelled the number of members to 14, the IEA says. The group’s crude output rose 400,000 barrels a day to 33.21 million a day as Saudi Arabia increased production to meet peak domestic demand during the summer and as Iran continued its export recovery following the end of international sanctions in January.
