Oil exporters’ cartel Opec is struggling to lift the oil price by cutting production. Oil has slid to a seven-month low of less than $45 a barrel. Opec countries that were not part of the agreement have been pumping more, while America’s increasingly cost-efficient shale-oil producers are also drilling more. The number of rigs in operation has been on the rise for months, heralding higher production.
Opec might also “want to cast an eye north”, says Gregory Meyer in the Financial Times. Canada is home to the world’s third-largest oil reserves. Output there is on the rise thanks to investment in drilling made several years ago. Extracting oil from the tar sands of Alberta requires several years of planning and billions in investment, but the projects “plod forward once begun”. Investments authorised when prices were more than $100 a barrel are coming to fruition now.
The upshot is that Canadian output is set to rise by 570,000 barrels per day in 2017 and 2018 combined – almost a third of the 1.8 million barrels per day Opec said it planned to cut in the first six months of 2017. The global oil glut isn’t going anywhere.