In our August Short-Term Energy Outlook (STEO), the EIA forecasts that total world petroleum production will average 98.9 million barrels per day (b/d) in the second half of 2021 (2H21). This is down from a forecast of 99.4 million b/d in the July STEO. The change is driven mostly by forecast changes to petroleum production from OPEC and Russia. This is as a result of the most recent OPEC+ agreement.
The EIA decreased their forecast for world petroleum production in 2021 because of lower forecast production from OPEC. This is only slightly offset by increased forecast production from Russia. They forecast that global petroleum production in 2022 will average 101.8 million b/d. This is 20,000 b/d less than forecasted in the July STEO.
On July 18, OPEC+, which includes OPEC and several non-OPEC members (including Russia), agreed to increase monthly crude oil production starting in August 2021. The latest agreement calls for total OPEC+ crude oil production to increase by 400,000 b/d each month until the previous production cuts are fully reversed. This would occur by the third quarter of 2022 if implemented at that rate. However, OPEC+ extended the production agreement to include monthly meetings through the end of 2022. This is so that it can adjust production targets as necessary.
In the August STEO, the EIA forecasts that OPEC total petroleum production will average 33.0 million b/d in 2H21. This is down 600,000 b/d from the July forecast for the same period. In the July STEO, the EIA expected that OPEC would raise production by more than the group ultimately agreed. That is in order to meet global demand. The EIA expects most OPEC countries will fully comply with the agreement during 2H21.
The EIA revised our forecast for OPEC petroleum production in 2022 up by 40,000 b/d from the July STEO. This is to average 34.2 million b/d. In 2022, they expect OPEC+ monthly petroleum production increases to total less than 400,000 b/d. This is to avoid oversupplying the markets and pushing down the price of crude oil. However, they expect that some countries will produce more petroleum. This is as a result of their increased baselines starting in May 2022, including the United Arab Emirates, Kuwait, and Iraq.
The forecast assumes that existing sanctions against Iran will remain in place through the end of the forecast period. However, our forecast includes rising petroleum production from Iran over that period. This is despite sanctions remaining in place. The EIA assumes that OPEC will not adjust petroleum production levels to accommodate this increase.
Despite changing the outlook for future petroleum production in the August STEO. Crude oil price forecast remains mostly unchanged from the July STEO.