The drop in oil prices, coupled with the decision by OPEC to keep production at current levels, will pressure the production of non-OPEC countries down. Faltering demand is the other cause for the situation, as it will remain slightly higher than flat this year.

The IEA observed in its January Oil Market Report:

The oil selloff has cut expectations of 2015 non-OPEC supply growth by 350 000 barrels per day (350 kb/d) since last month, to 950 kb/d. Effects on North American supply are so far limited to 95 kb/d and 80 kb/d to the Canadian and US forecasts, respectively. Projections are cut by 175 kb/d for Colombia and 30 kb/d for Russia.

Also:

OPEC output rose by 80 kb/d in December to 30.48 mb/d, as Iraqi supply surged to 35-year highs, offsetting deeper losses in Libya. Downward revisions to the non-OPEC supply outlook raise the “call” on OPEC for the second half of 2015 to an average 29.8 mb/d – just shy of OPEC’s official target of 30 mb/d.

Russia and Venezuela are among the nations that can least afford cuts. Russia’s economy is already reeling from sanctions. Oil exports had kept its economy stable. The same is roughly the true in Venezuela. Social unrest in the two countries is likely to be worsen as the pressure on exports falls.

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