Opec, which meets on Sunday for its Joint Monitoring Ministerial Committee meeting in Abu Dhabi, will look to reinvent itself as it finds itself outpaced by surging US oil supply and a tighter spare capacity environment.
Data from the US Energy Information Administration showed US supply had swung up to 11.6 million barrels per day last week, eclipsing Saudi Arabia’s 10.7 million bpd and Russia’s own 11.4 million bpd.
The added oil barrels and uncertainty have plunged the markets into bearish territory, with Brent falling to $69 per barrel on Friday.
Much of the US supply, which has revived following the end to the three-year slump in oil markets, is on top of the production for domestic consumption, worrying Opec and its ally Russia.
The US administration under President Donald Trump had earlier exerted pressure on Opec's de-facto leader Saudi Arabia and its allies to pump more crude to push the prices down, which had breached $80 per barrel level ahead of the country's midterm elections.
Saudi Arabia has already expended its production capacity, stretching to limits, with the market getting tighter leading up to the US sanctions against Iran, which came into effect on November 5.
Waivers to Tehran’s key eight buyers, a measure the US has offered as means to monitor the slow withdrawal of Iranian barrels from the market in six months, does not come as a panacea to the markets, least of all to Opec.
With Iranian crude expected to halve from current levels of 1.6 million bpd to 800,000 bpd by mid-2019, according to consultancy Facts Global Energy, Opec finds it difficult to compete with a surging US crude supply.
Under the circumstances, Saudi Arabia may consider forging a closer bond with Russia, using their collective 20 million bpd plus output as a bulwark against
Opec and its allies led by Russia, have reversed an earlier crude restriction pact by increasing supply since May this year to moderate prices, were widely expected to sign a charter institutionalising their co-operation during their meeting in Vienna next month.