— This is the script of CNBC's news report for China's CCTV on December 3, Tuesday.
Welcome to the CNBC Business Daily.
The Organization for Petroleum Exporting Countries is set to meet later on this week to review its production targets for the coming quarter. OPEC is expected to to leave targets intact, but forecasters are predicting that global demand for OPEC crude could fall to 29.5 million barrels in the coming year.
Sanctions, political unrest and oil theft have left Iran, Libya, Nigeria and Iraq producing below capacity, and while this situation is unlikely to change in the near term, OPEC faces increasing price pressure from the US shale boom and from non-OPEC countries like Russia, Brazil and Kazakhstan.
With a Western nuclear deal under its belt, Iran in particular, is expected to push for a return to its role as the cartel's second largest producer. Western sanctions imposed in 2012 have cost Iran billions of dollars in oil revenue and Iran has already accused fellow producer Iraq of profiting at its expense.
So how will this tension affect the price of oil? Here's what one analyst told CNBC:
[Soundbyte on tape by Tom Essaye, President, Kinsale Trading] I'm sure the official party line will be that they will keep the quota standing. But I would love to be a fly on the wall at that OPEC meeting. They have a problem coming. We're going to see increased production from Libya, Nigeria, Iraq and potentially Iran. So we are going to see a lot of oil coming out of that, and as we know with OPEC, the problem is always keeping people on that quota - keeping them from cheating. And I imagine there'll probably be some frank and entertaining conversations at that OPEC meeting on getting people to hold the line on supply in the face of all those other countries starting to produce again.
In the meantime, Mexico has lots of oil - but not enough money to drill for it.
In the US-controlled part of the Gulf of Mexico, more than 300,000 barrels of oil are brought up from the deep waters. In the Mexico-controlled area, zero. That's a situation the country's new president is trying to change.
CNBC's Michelle Caruso Cabrera filed this report:
Fifty-five miles off the coast, the Centernerio platform is one of the few deepwater drills controlled by Pemex, the Mexican Government's oil and gas company.
But Centernario is an exploration drill. What Pemex really needs? Production drills, and lots of them, to get to as many as 50 billion barrels of possible oil reserves they estimate to be in the deep waters of the Gulf of Mexico. Carlos Morales, Head of Exploration and Production at Pemex says quite simply - they don't have the money.
[Soundbyte on tape by Carlos Morales, Head of Exploration and Production, Pemex]
The investment required for extracting all those resources is huge. The required investment is 60 billion dollars per year to be exact. Pemex is only spending only 25 billion per year. It's a critical situation because Mexico needs new sources of oil. Production is down sharply in the last ten years, from 3.5 million barrels per day to only 2.5 million barrels per day.
[Piece to camera by CNBC Reporter Michelle Caruso Cabrera]
Up until now, companies like Halliburton and Schlumberger have only been permitted to have service contracts in Mexico, but the country's new president wants to change all that.
Enrique Penaneto is working with the country's parliament to change the country's constitution and allow the necessary foreign investment. It's a controversial move. Mexico kicked out all the foreign oil companis in 1938 in the midst of a socialist revolution. Still, experts say the changes are likely to come. Its just a matter of how far the reforms will go. For Pemex, they can't come soon enough.
Li Sixuan from CNBC's Singapore headquarters.