OPEC Secretary General unveiled the organization’s roadmap (oil supply and demand outlook to 2040) in an official ceremony yesterday. The document is one of the most reliable international ones for predicting demand and supply as well as other oil market related issues. OPEC expects oil demand to reach above 111 million bpd in 2040. World consumption in 2016 stood at 95.4 million bpd. OPEC roadmap introduces India and China as the two biggest customers of oil. However, demand’s growth rate will reduce from 1.5 million bpd in 2017 to 810,000 bpd in 2022 and 300,000 bpd in 2040. According to the released report, despite the growth in productivity and consumption of renewable energies will influence the demand for fossil fuels, oil will remain important and OPEC will continue its significant role.
One of the most important issues addressed in the presented roadmap is production of Shale in the U.S. which will experience an ever-increasing upward trend in the next four years. In 2021, shale production in North America will stand at 7.5 million bpd, 56 percent more than last year’s predictions. The U.S. will be the largest shale producer. Shale will also be produced by Canada, Argentina and Russia. In North America shale output hit 5.1 million bpd in 2017. Shale producers could match themselves with oil price fluctuations. Shale production rise in the U.S. will reduce the country’s reliance on oil imports especially from the Middle East.
According to the released roadmap by OPEC, oil prices will incrementally increase by 2040. Brent oil was traded at London’s market at the price of $63.71 per barrel. It is about one and a half year that OPEC tries to return oil price level to its previous figure in the past five years. With cooperation of non –OPEC countries, the international body reduced its production volume for 1.8 million bpd. OPEC members plan to get together 20 days later to extend oil cut for another six months. Although the recent tensions in the Middle East and the occurred changes in Saudi Arabia have pushed oil prices up, it should be remembered that oil market obeys influential factors including demand and supply in the long run. Getting OPEC-members united and reconciling them with non-OPEC countries, the organization could manage to pull up oil prices from $20 per barrel to about above $60 per barrel. OPEC-members are highly reliant on oil and they are bound to cooperate to guarantee sustainable income in future.
The present OPEC outlook predicts that in 2022, non-OPEC production will reach 62 million bpd from its 57 million bpd in 2016, which is higher than previous predictions. The U.S. production will play an important role in this increase. However, non-OPEC output will reduce step by step and in 2040 will reach 60.4 million bpd. According to the report, OPEC production in 2040 will increase up to 41.4 million bpd. In better words, OPEC’s share of the international oil market will increase from 34 percent in 2016 to 37 percent in 2040. Therefore, OPEC will become a more international body within the next three decades. OPEC members should tighten their internal bonds, accordingly.
By: Reza Zandi, Senior Journalist, Oil Analyst
Courtesy of Etemad Newspaper