Could OPEC lose its control over global oil prices?

The International Energy Agency claims that efforts by the Organization of the Petroleum Exporting Countries and its partners, or OPEC+, to support prices by reducing production could be “upended” by an impending surplus in the world’s oil supply.

The United States and other American nations are expected to lead the increase in global oil output, according to the Paris-based IEA, which predicts that this will “inflate the world’s spare (oil) capacity cushion” to levels last seen during the coronavirus pandemic when oil prices plummeted.

The organization predicts that by 2030, the world’s oil supply would surpass demand by an astounding 8 million barrels per day in its medium-term oil market study. According to IEA executive director Fatih Birol, “(that’s) a major, major surplus and… might be one of the highest in the history,” he told reporters.

That surplus “could upend the current OPEC+ market management strategy aimed at supporting prices,” the agency said in its report, adding that the glut could result in a “lower-price environment.”

OPEC, which has allied itself with Russia and other producers, did not immediately respond to a CNN request for comment.

The IEA also forecast growth in global oil demand to “slow progressively” over the rest of the decade, with demand peaking by 2029 before contracting slightly the year after.

The agency said the accelerating deployment of clean energy technologies, including “surging EV sales,” would be one of the main reasons for the slower growth in oil demand.

OPEC+ has been restraining output for about two years in a bid to prevent the emergence of a huge supply surplus that could depress prices and hurt the oil-dependent economies of its member states. Its production cuts amount to about 5.7% of global crude supply.

Earlier this month, the group agreed to extend those deep reductions in crude oil output into 2025, but also said it would start to gradually unwind some of the cuts from October 1.

Despite the cuts, oil prices have trended downward in recent months. The price of Brent crude, the global oil benchmark, has tumbled almost 9% since hitting a five-month high in early April, to trade at $83 per barrel Wednesday. It stood at $91 in early April when a suspected Israeli airstrike on Iran’s embassy in Syria sent jitters through oil markets.

The price of West Texas Intermediate crude, the US benchmark, has also fallen 9% to trade at $79 a barrel Wednesday. It is down from nearly $87 per barrel in early April.

Subdued oil prices have partly been the result of record US oil output, which has bumped up global supply, and concerns about sluggish demand in China, the world’s biggest importer of oil, as well as in other major economies.