Deloitte: OPEC influence waning as US shale surges

HOUSTON — Over the next five or six years, surging shale-oil production in the United States could cut deep into OPEC’s influence over global oil prices, a new report says.

The shale bonanza already has proven it can sway international markets, by stabilizing prices as the Organization of Petroleum Exporting Countries’ spare capacity tightened and Middle Eastern conflicts disrupted global supplies, according to Deloitte’s annual Oil and Gas Reality Check report released this week.

“As the U.S. becomes more self-sufficient, it’s possible to see the U.S. interest in the Middle East wane, and the extent to which the Middle East feels they have sway over the U.S. will decline because it’s less dependent” on oil imports, said Carl Hughes, Deloitte’s global industry leader for energy and resources, in an interview with FuelFix this week. “At the same time, exports of oil and gas from the Gulf states are going to flow much more to Asia than in the past.”

Between 2002 and 2012, OPEC’s command on international oil markets remained steady, with exports from Middle Eastern states and other member countries accounting for 28 percent of worldwide consumption.

The U.S. shale boom is starting to change that. The nation’s daily output grew by 1.6 million barrels to 10.4 million barrels between 2010 and 2013, according to the Energy Information Administration. OPEC oil shipments fell by 1.2 million barrels per day during the same time.

And as the U.S. oil harvest approaches another 1.5-billion-barrel per day boost by 2017, OPEC’s dominance in the market — and exports — probably will continue to diminish, and oil imports from Venezuela, Canada and Mexico could shrink, as well, according to Deloitte.

Prices are expected to hover between $90 and $100 per barrel through the end of the decade, according to the Energy Information Administration.

West Texas Intermediate crude hit $106.43 a barrel Thursday. It had risen past $100 a barrel in May.

Increased production from the U.S. and Iraq is “providing a cushion for global markets, counterbalancing supply tightness and disruptions around the world,” even as OPEC’s spare capacity fell from 6 million barrels per day in 2002 to 2.75 million barrels per day around 2012, according to the report.

Lagging demand for global exports – and, potentially, declining prices – could constrain OPEC governments that rely on oil revenues. But lowering production ceilings for OPEC countries – the organization’s usual response to poor demand – may further deplete its market share on the international stage and hamper its influence on global markets, according to Deloitte.