Top crude oil producers are not OPEC members!

Of the world’s top six crude oil producers, four are outside OPEC, while the five largest producers are not all members of the organization. The top producers include the United States, Russia, Canada, and China, while Saudi Arabia ranks third and Iraq sixth among the largest oil producers. This suggests that several of the world’s leading crude oil producers operate outside O P E C , even though many O P E C members depend on oil for more than 80 percent of their national income.

This may come as a surprise to many readers. Could OPEC production quotas be a contributing factor, requiring member countries to limit or reduce their production? On the other hand, the countries with the largest crude oil reserves include Venezuela with approximately 300 billion barrels, Saudi Arabia with 268 billion, Iran with 209 billion, Canada with 170 billion, and Iraq with 145 billion barrels. Kuwait and the United Arab Emirates have reserves of approximately 100 billion to 110 billion barrels each. Today’s leading oil producers may not retain their positions in the long term, as countries with the largest proven reserves could increase production and overtake them in the years to come. Another factor is OPEC’s production quota system, which requires member countries to restrict their production to help maintain competitive oil prices and avoid disruptions to the global economy.

Uncontrolled production could contribute to inflation, excessive price fluctuations, market uncertainty, and potentially damaging price wars. Over the past month or so, oil prices appear to have remained relatively stable, fluctuating between $106 and $112 per barrel. They may remain within this range for the rest of the year, provided no unexpected events trigger another sharp increase. However, such developments remain difficult to predict. Oil prices require stability and favorable economic growth across global economies to stimulate demand without disruption. Oil-producing and exporting countries also need favorable economic conditions to support steady demand and maintain stable crude oil prices. Unforeseen events can trigger inflation and increase the cost of imported goods, including the materials and equipment required for oil production.

This can, in turn, fuel domestic inflation and intensify calls for higher oil prices, potentially creating a cycle in which rising costs lead to further price increases. Current oil prices are encouraging for Gulf producers, provided they remain at these levels through the end of the year. At around $110 per barrel, crude oil prices appear to be approaching the level needed to balance budgets and reduce the need for additional borrowing. Simply put, a balanced budget means that Kuwait’s oil revenues are sufficient to cover its expenditures, with an oil price of around $110 per barrel. This is close to the crude oil price required to balance Kuwait’s budget for the current fiscal year, which ends in March 2027, although the required price may be slightly higher. Let us hope oil prices remain at current levels to help avoid budget shortfalls and deficits.

From our perspective, oil prices are likely to remain strong for the rest of the year, as current global developments are not conducive to price stability at lower levels. Most crude oil price indicators remain above $106–$110 per barrel, while Russian crude oil prices have exceeded $122 per barrel. Europe’s need to import some of its crude oil from Russia, subject to obtaining the necessary approval from the US administration, is another factor contributing to firm oil prices. These conditions could keep prices elevated through the remainder of the year.

By Kamel Al-Harami
ndependent Oil Analyst
Email: [email protected]