OPEC cannot keep up with rising oil demand - July 19

[dan_s]

Per EIA: global oil demand will increase by ~25 million barrels per day over the next 20 years (by 2043). Where will that extra supply come from?

Bloomberg today with my comments in blue.
Five Middle Eastern states – Saudi Arabia, United Arab Emirates, Kuwait, Iran and Iraq – operate 81% of OPEC’s 34.1 million barrels per day of oil production capacity. These five countries plan to expand production capacity by a combined 5.3 mbpd by 2040. Saudi Arabia and UAE will lead, adding a combined 1.8 mbpd by 2027. This comes at a time when oil production growth is slowing down in key regions like the US. < It now looks like U.S. oil production will have difficulty making it back to pre-pandemic production of ~12.9 million bpd. This morning, EIA reported that U.S. oil production averaged 12.2 million bpd last week, which is just 0.1 million bpd higher than where it was the first week of August, 2022 and 0.2 million bpd lower than what EIA reported for the week ending June 30, 2023. As I have posted here many times, at the current active drilling rig count the U.S. cannot increase production.

Besides extensive oil resources – they make up over half of proven reserves – the low breakeven costs of Middle Eastern oil producers place them in an entirely different league. These five producers can achieve breakevens for their oil production at a remarkably low price of $20–$26 per barrel, besting their Latin America and US Permian counterparts. < However, even OPEC does not have unlimited production growth.
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Per IEA's July Oil Market Report: Global oil demand will average 102.1 million barrels per day in 2023 and increase to 103.2 million barrels per day in 2024. < This is 2 million barrels per day higher than current supply!
Q3 is the highest demand quarter of the year and demand needs to be near 104 million barrels per day in Q3 2023 to reach IEA's full year estimate.
So, if IEA's forecast is that demand will be over 120 million barrels per day by 2040 and OPEC can only add 5.3 million barrels per day more supply, where does the additional ~14 million bpd of supply come from? It won't be the U.S. or Canada.
As soon as next year, oil-based products will need to be "rationed by price" to keep demand in line with supply.