Vienna, December 10

OPEC said today that it expects oil production by countries outside the cartel to fall in 2016 by more than it previously forecast, in a sign that its audacious strategy may be working at last.

In its latest monthly report, the Organisation of the Petroleum Exporting Countries (OPEC) said 2016 oil supply from outside the group will decline by 380,000 barrels per day to average 57.14 million per day.

The previous forecast from OPEC, which pumps around a third of the world’s crude, was for a drop of 130,000 barrels per day for countries outside the 13-country group.

Oil prices have plunged by more than 60 per cent in the past 18 months due to a global supply glut and a weaker Chinese economy, with Brent crude falling under $40 this week for the first time since 2009.

In the past OPEC has responded to price falls by curbing production. But this time — most recently at a meeting in Vienna last Friday — it has opted to keep the taps open.

Driven by cartel kingpin Saudi Arabia, this strategy is aimed at maintaining market share and squeezing out US producers of shale oil, whose output has boomed in recent years but which need a higher oil price to make money.

The new December monthly report suggested however that its ploy may be taking longer than expected to bite, with the cartel obliged to increase its forecast for 2015 non-OPEC production.

After the ‘tremendous’ growth of 2.23 million barrels per day in 2014, the cartel now expects growth in 2015 to have been a ‘much slower’ one million — but up from its previous projection of 280,000 barrels.

The biggest expected drop in 2016 — of 110,000 barrels — will come from the United States.