As the price of Brent oil approaches the $70 per barrel mark, international oil companies are not busy increasing production to chase rising oil prices, only seen in decades, because investors are demanding that oil majors such as ExxonMobil make more efforts on climate change, a trend that could enhance the ability of the Organization of Petroleum Exporting Countries and partner countries (OPEC+) to regulate the international oil market.
Bloomberg reports that the oil industry is in a difficult position today because Wall Street investors are demanding that the industry cut drilling spending and give back more cash to shareholders, and environmental groups are constantly boycotting fossil fuels. ExxonMobil is a typical representative of this trend, the company last week two directors were replaced, because investors believe they can not respond to the threat of climate change.
The reluctance of major oil companies to increase production, coupled with a slower-than-expected rebound in crude output from non-OPEC+ countries, is a good opportunity for OPEC+ members to increase production.
Top corporate executives and traders said the slow increase in crude oil production from non-OPEC+ countries will help OPEC+ enhance its ability to regulate the international oil market. In the past, if oil prices were higher, oil companies tended to quickly restart their investment plans to increase non-OPEC production, which in turn made it more difficult for OPEC+ members to regulate oil market supply and demand.
Overall, non-OPEC+ countries will increase production by a total of 620,000 barrels per day this year, but last year’s 1.3 million barrel per day decrease represents less than half the amount of production rebound. Next year, although the United States, Brazil, Canada and a few other oil-producing countries may increase production, but the United Kingdom, Colombia, Malaysia and Argentina may decline in production.