But the Organization of the Petroleum Exporting Countries (OPEC) is staying the course, for now at least.
OPEC will keep its oil production target at 30 million barrels a day for the first half of 2014, the 12-member cartel announced at a meeting in Vienna Wednesday. Nevertheless, if supply continues to rise in countries like the US, Canada, Iraq, and Iran, the cartel may have to rethink its strategy.
Oil prices remain historically high, and the world's leading oil producers would prefer to keep it that way. Maintaining current production levels, the cartel said Wednesday, will help meet growing demand from developing countries and fuel economic recoveries underway in the US and Europe.
“The market is in the best situation it can be," Ali al-Naimi, the Saudi oil minister, told reporters as he arrived for the meeting Monday, as reported in the Financial Times. "Demand is great, economic growth is improving, so what more do you want?”
The average price for OPEC oil has remained steadily above $105 for the past three years, about four times what it was a decade ago. Global benchmark prices have remained historically high as well, but they have slipped in recent months.
Brent crude oil fell from a monthly average of $112 per barrel in September 2013 to an average of $109 per barrel during October, according to a November report from the US Energy Information Administration (EIA). It will continue to fall to an average of $106 per barrel this month and $103 per barrel in 2014, EIA forecasts.
Production in the US and other rising energy players is helping to push prices down, or at least keep them in check. The US is forecast to become the world's largest oil producer between 2015 and the early 2030s, according to the International Energy Agency, due largely to advances in drilling techniques.
Analysts are closely watching Iran to see if its oil will become available to the global market. Easing relations between the Islamic Republic and the West could mean a scaling back of sanctions that have cut Iranian oil exports in half.
"The Iranians and the Iraqis and the Libyans all say that they will ramp up production next year," Seth Kleinman, head of energy strategy at Citigroup, the international bank, wrote in an e-mail from Geneva. "If even one of these happen, OPEC will have a problem. If two or more happen, OPEC will have a big problem, but for now OPEC is taking a wait-and-see approach, which is very sensible with Brent [crude oil prices] over $110."
Demand is rising, too, as a middle class grows in China, Southeast Asia, and other emerging markets. Economies battered by the global recession seem to be slowly rebounding as well. Global economic growth will increase to 3.5 per cent in 2014 from 2.9 per cent in 2013, OPEC forecasts. Oil demand should follow that upward trend, rising by 1 million barrels per day in 2014.
It's a delicate balancing act between growing supply and growing demand in a global energy landscape that continues to evolve.
"[A]lthough the market has started to gradually emerge from the tough economic situation of the past few years, the pace of world economic growth remains slow," Mustafa Jassim Muhammad al-Shamali, the Kuwaiti oil minister, and president of this year's OPEC conference, said in prepared remarks. "Clearly, there are still many challenges to overcome. With this in mind, OPEC will continue to monitor the situation closely in the interest of market stability."