Crude oil production from non-OPEC countries is expected to drive most of the global supply growth in both 2024 and 2025, according to the U.S. Energy Information Administration (EIA). The EIA predicts non-OPEC production will increase by 1.8 million barrels per day (bpd) this year and 1 million bpd next year. This growth poses a challenge for OPEC.
For nearly three years, OPEC and its allies in OPEC+—led by Russia—have kept a significant portion of their combined oil production off the market. This includes almost 6 million bpd, which is about 5.7% of the global supply, as reported by Reuters. By holding back production, OPEC has helped maintain higher international oil prices, incentivizing more drilling in non-OPEC countries. However, as non-OPEC production continues to rise, the key question is how long OPEC and OPEC+ will limit their output and lose market share to competitors outside the group.
Last year, non-OPEC countries increased production by 1.8 million bpd, and the EIA expects a similar growth rate this year. The United States, Canada, Guyana, and Brazil will lead this growth. In contrast, OPEC’s supply will grow by just 100,000 bpd this year and 600,000 bpd in 2026, according to the forecast.
Despite the rising competition, OPEC and OPEC+ have shown remarkable restraint in their production over the past three years. Historically, the group would have increased output to combat competition. But this time, OPEC has stuck to its strategy, and officials have made it clear that they have no plans to change their approach, even in the face of calls from the International Energy Agency (IEA) and the U.S. president to boost production. As a result, non-OPEC production continues to grow, while OPEC maintains its production cuts.
The IEA’s latest monthly report predicts global oil supply will increase by 1.6 million bpd this year, with most of the gains coming from the Americas—again, led by the U.S., Canada, Brazil, and Guyana. However, both the EIA and U.S. oil executives are not expecting significant production increases in the U.S. due to pricing concerns. A large increase in production from other non-OPEC countries could also undermine these predictions.
Meanwhile, global oil stocks continue to shrink, and this may be a key factor in OPEC and OPEC+ maintaining their production cuts. They believe that as global oil inventories dwindle, traders will adjust their expectations, potentially pushing prices higher.
The IEA reported that in January, global crude oil stocks fell by 950,000 bpd due to seasonal demand and supply declines in Nigeria and Libya. Despite this, total supply in January was still 1.9 million bpd higher than a year earlier. However, the IEA also noted that crude stocks in the OECD countries dropped by 63.5 million barrels in December, with industry inventories falling 91.1 million barrels below the five-year average. This suggests that global oil stocks are not as healthy as they may appear, which may be influencing OPEC+ to continue their production cuts.
OPEC+ has seen its market share decline in recent years. When the group was formed in 2016, it controlled 53% of the global oil market. By 2024, that share had dropped to 47%, primarily due to production cuts and increasing competition. The EIA forecasts that OPEC+’s market share will continue to shrink by another percentage point this year. While this is a gradual decline, it’s a trend that OPEC may need to address sooner or later. However, the options available to the group are limited and risky.
In the past, OPEC has responded to competition by flooding the market with crude oil. This strategy worked—until it backfired in 2020, when Saudi Arabia and Russia clashed over production policies. Saudi Arabia’s price war against U.S. shale producers contributed to a 65% drop in oil prices, compounded by the demand destruction caused by the COVID-19 pandemic. This price war ultimately led to the formation of OPEC+.
OPEC’s past price wars against U.S. shale producers were more effective due to the high production costs and price sensitivity of shale drillers. This factor may be important in future efforts to maintain higher prices and protect OPEC’s revenue. However, whether OPEC and OPEC+ would risk another price war is uncertain, especially given the potential consequences. The group may hold off on such a move unless it sees no other viable option.
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