The prolonged slump in oil prices is set to hand a growing share of the oil market to the Middle East.
According to new research, suppliers outside the Opec cartel are destined for three years of fierce competition with its member states, including Saudi Arabia, Iraq, Iran and Kuwait.
Opec’s World Oil Outlook report, released yesterday, suggests that the organisation will deliver an average of 38.9 million barrels per day this year, just over 40 per cent of the 95 million barrels per day of total world supply. However, it says that by 2019 Opec’s share will rise to 40.6 million barrels, or more than 41 per cent of the increased 97.6 million barrel total.
The report forecasts that the share of non-Opec producers such as the United States will fall next year, as big spending cuts by oil companies take effect. Total non-Opec supply is expected to shrink from 56.9 million barrels per day in 2015 to 55.9 million in 2017.
Overall, Opec is betting that global oil demand will carry on rising for another 25 years, despite United Nations-brokered climate change commitments that aim to curtail fossil fuel consumption. The 14-member cartel, which also includes Venezuela, Ecuador, Nigeria and Angola, has based its findings on predictions that the Paris agreement, which took effect last week, will fail to achieve a significant shift in energy consumption patterns. Its report predicts that global crude demand will rise by a further 16.4 million barrels per day by 2040 to 109 million barrels and claims that by then oil and gas will provide about 53 per cent of world energy demand.
Opec’s oil ministers are due to meet this month to decide how to cut output to boost global oil prices. Producers have been hit hard by a collapse in crude prices from more than $114 per barrel in June 2014 to lows of $27 in January. Since then, prices have recovered to about $45 per barrel, but the market remains over-supplied.