Is the Gulf losing its grip on the oil world?
The global oil market has shown resilience despite disruptions caused by the Iran war, with prices remaining around US$100 per barrel. Oil production in the Americas is increasingly meeting global demand, with significant output increases from countries like the US and Brazil. However, while the Americas are expanding production, the Gulf region still maintains a cost advantage in oil extraction.
- ▪The global oil market has remained resilient despite disruptions in the Strait of Hormuz.
- ▪Oil production in the Americas is expected to rise significantly, potentially reaching 30 million barrels per day by 2026.
- ▪Gulf producers have lower extraction costs, which may allow them to outlast higher-cost producers in the Americas during price downturns.
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One of the most striking features of the Iran war has been the resilience of the global oil market. Despite the disruption of flows through the Strait of Hormuz, the world’s most important oil transit chokepoint, prices have generally hovered around US$100 per barrel – a lower level than many observers had expected. A key reason for this resilience is the growing importance of oil production in the Americas. Even before the war, the International Energy Agency predicted that virtually all global oil demand growth in 2026 could be met by rising supply from North and South American countries such as the US, Canada, Brazil, Guyana and Argentina. At that time, the OPEC oil producers’ cartel was also preparing to increase output, raising expectations of a period of oversupply and weak prices.
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Excerpt limited to ~120 words for fair-use compliance. The full article is at Asia Times.
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