The global crude market is currently oversupplied due to seasonally high seaborne exports, and the question of which region will slow its growth first centers on the differing production incentives and geopolitical pressures facing suppliers.
Drivers of Current High Exports
Global seaborne crude exports remained at high levels in October, despite a slight decrease from the $45 million barrels per day (mbd) crossed in September. The supply surge is driven by two main areas:
- OPEC-8 (Excluding Russia): The aggregate seaborne exports for the eight OPEC+ members reached $21.6 mbd in October, a strong level compared to earlier in the year. However, the announced unwinding of voluntary cuts has been largely negated in terms of seaborne volume when Russia is excluded from the group. OPEC-8 (excl. Russia) volumes are trending below the seasonal average.
- Russia: Russia has been the primary driver of the OPEC-8’s recent export ramp-up. This is due to drone strikes impacting its refining capacity, which has freed up crude barrels that must be pushed into the export market instead of being processed domestically.
- The Americas: This region has seen strong export growth of $1.2 mbd over the past three months compared to the same period in 2024. Growth is driven by:
- Recovery in US crude exports.
- Production increases in Brazil, Guyana, and Argentina (driven by offshore projects).
- The Trans Mountain expansion is bringing Western Canadian crude to the market.
- Increased exports from Venezuela (mainly to China, with some volumes reaching the US after the Chevron export license was re-granted).
Who Will Slow Down First?
The Americas are structurally positioned to sustain their growth longer than the OPEC-8 bloc (especially Russia), making OPEC+ the most likely candidate to adjust production first to address the oversupply.
| Supplier Group | Export Drivers | Incentive to Cut/Halt Growth | Likely Scenario |
| Americas | Long-Term Offshore Projects (Brazil, Guyana, Argentina) that are already funded and lack an incentive to shut or reduce production. US Shale (Permian Basin). | Low—growth is structural (offshore) or highly resilient (Permian shale). | Growth is likely to continue, potentially accelerating if new sanctions open up market share. |
| OPEC+ (excl. Russia) | Voluntary Unwinding of production cuts. | High—OPEC+ is the traditional swing producer and has a clear history of stepping in to arrest price declines. | Most Likely to Cut. They may step in if Brent prices fall below $\mathbf{\$60/bbl}$, potentially repeating prior production cuts to support the market. |
| Russia | Distressed Exports due to drone strike damage on refining capacity. | Medium—Driven by geopolitical and physical infrastructure constraints, not market choice. New sanctions on Rosneft and Lukoil could complicate exports to buyers like India and China, which may force a reduction in barrels reaching the water. | Growth is volatile and involuntary. New sanctions may push buyers to seek replacement barrels from non-sanctioned OPEC+ and the Americas. |
The main pressure point for the market remains the Brent crude price. If prices continue to fall below $60/bbl, OPEC+ is expected to intervene by announcing production cuts (similar to what has been seen before) to prevent a further price collapse.
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Source: Breakwave Advisors
