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OPEC Is Looking For Another Member

OPEC’s top producer and de facto leader Saudi Arabia has informally asked Brazil to join the organization, Brazilian President Jair Bolsonaro said on Wednesday, adding that he would personally like his country to be a member of the Organization of the Petroleum Exporting Countries.

Another large member would be rather convenient for OPEC, who has seen its influence wane in recent years thanks to growing US shale.

“I personally would very much like Brazil to become a member of OPEC,” Bolsonaro said at the Future Investment Initiative 2019 in Riyadh, as carried by Reuters.

Bolsonaro was informally asked Brazil to join OPEC after he held meetings with senior Saudi government officials this week, including with Saudi Crown Prince Mohammed Bin Salman, Bloomberg reports.

The Brazilian president would have to consult with his economy and energy ministers and teams about joining OPEC, Bolsonaro said.  

If Brazil becomes a member of the organization, it would be the third-biggest producer after Saudi Arabia and Iraq, and ahead of the United Arab Emirates (UAE) and Kuwait, for example.

If Brazil were to join OPEC, it would be one of the biggest members in terms of production to have become a member in decades.

Production in Brazil is rapidly growing thanks to start-ups of new offshore oil fields. Total liquids production increased by 480,000 bpd year on year to 3.10 million bpd in August—a record high, according to Energy Aspects. Crude oil production in Brazil jumped by 220,000 bpd on the month to 2.99 million bpd in August, thanks to rising production in the pre-salt layers.

Related: OPEC Powerless Against Global Production Growth

According to OPEC’s estimates in its latest Monthly Oil Market Report (MOMR), the 2.99-million bpd crude oil production in August was an all-time high.

The cartel estimates that Brazil will be the second-largest contributor to non-OPEC supply growth this year and next, after the United States. Brazil, like the United States, is not part of the OPEC+ coalition that currently restricts production hoping to draw down global oversupply.

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Ironically, it’s the soaring non-OPEC supply growth that has wrecked a large part of OPEC’s efforts to rebalance the oil market and prop up prices. If Brazil does become a member, OPEC will have a say in Brazil’s oil production as well, increasing the overall market share over which it has influence.

By Tsvetana Paraskova for Oilprice.com

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