Oil producers brace for market share battle

OPEC+ launches a crude oil price war, and everyone will feel the pain

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The gloves are off. OPEC+—the alliance of major oil-producing countries led by Saudi Arabia and Russia—has abandoned its price-support strategy. Instead, it’s flooding the market to punish overproducers and claw back market share, regardless of the consequences.

For three consecutive months, despite falling prices, OPEC+ has ramped up output, bringing back 1.37 million barrels per day to the market. Until recently, it had withheld 5.3 million barrels per day—about five per cent of global supply—to stabilize prices. But that restraint is vanishing fast. The group is now rolling back voluntary cuts at high speed, opening the taps just as global markets are showing signs of oversupply.

Geopolitical developments are adding fuel to the fire. A possible breakthrough between Iran and the United States could put even more crude back into circulation. Meanwhile, Russia continues to find ways to move oil despite sanctions.

On top of that, U.S. production hit an all-time high in March at 13.499 million barrels per day, surpassing the previous record set just months earlier. Shale producers in the Permian and Gulf Coast regions continue to churn out oil, even as drilling slows elsewhere.

This rising tide of supply spells trouble for all producers, but it presents a unique challenge for jurisdictions like Canada, where oil sands production is a major driver of jobs, investment and government revenue.

Oil sands projects require massive upfront capital and long lead times, making new investments harder to justify in a weak price environment. Yet once built, these operations are remarkably resilient, with low ongoing costs and long production lifespans.

Major Canadian producers like Canadian Natural Resources can remain profitable even when West Texas Intermediate—a key oil price benchmark—falls into the low-to-mid US$40s. That long-term efficiency offers a structural advantage over U.S. shale, which depends on constant reinvestment. Still, prolonged low prices can stall future oil sands development and weigh on government budgets.

Meanwhile, demand is faltering. U.S. consumption dropped to its lowest level in a year, with total petroleum products supplied falling to 19.95 million barrels per day, a red flag for refiners heading into the crucial summer driving season.

Hopes that India might offset global demand weakness are fading. While its economy is growing, “India’s volumes aren’t anywhere near the Chinese boom in consumption that began in the early 2000s,” wrote Tsvetana Paraskova in Oilprice.com. Those who expected India to be the “next China” are in for disappointment. Between 2000 and 2025, Chinese crude demand growth averaged 485,000 barrels per day, noted Bloomberg opinion columnist Javier Blas. In contrast, India’s crude demand growth is just around 200,000 barrels per day annually, less than half of China’s booming growth during the 2000s and 2010s.

This growing mismatch between surging supply and tepid demand is already taking its toll. Brent price forecasts have been revised downward for the third straight month. Analysts now expect it to average just US$66.98 in 2025. U.S. crude is forecast to average US$63.35. These are bleak numbers for producers across the board.

As Rystad Energy’s Jorge Leon puts it, “Three strikes from OPEC+, and none were softballs. May warned, June confirmed, and July fires a shot across the bow.” The message is clear: OPEC+ is done playing nice.

This is a direct challenge to North American shale and high-cost producers like Canada. With the market saturated and demand falling short, the price pressure is mounting. Unless producers adapt quickly, they’re in for a punishing stretch.

The global oil market is being reshaped in real time, and the consequences will be felt in boardrooms and across national economies.

Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.