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Asia Today ISSN 1861-4604 Monday, July 16, 2018

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OPEC chief optimistic of balanced oil market in 2016

Growth to reach 110 million barrels a day by 2040

Share on Facebook October 11, 2015, Reporter : BigNewsNet, Reader : 828

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KUWAIT CITY - Abdalla Salem al-Badri, Secretary general of the Organization of the Petroleum Exporting Countries (OPEC), is optimistic of better days for the industry with a more balanced oil market in 2016 as the demand grows and non-OPEC supply contracts.

Projecting demand growth to reach 110 million barrels a day by 2040, Badri said at an oil and gas conference here on Sunday. "At OPEC, we are hopeful that the industry will see a more balanced oil market in 2016In recent months, there has been a contraction in production from non-OPEC producers and an increase in global demand."

Brent crude, a global pricing benchmark, has dropped 41 percent in the last 12 months and more than 50 percent since the peak in June last year as the OPEC countries led by Saudi Arabia chose to protect market share instead of decreasing output to boost prices. OPEC and non-OPEC experts are to meet in Vienna on October 21 to discuss the market.

Badri said OPEC is ready to cooperate with non-OPEC producers to deal with the market glut if they show similar willingness.

World crude output is at 75 million barrels a day and other liquids add about 18 million barrels a day to global supply, he said.

Stressing that stability in price is paramount to the crude market, which faces "extremely challenging times," the OPEC chief said the market remains oversupplied and stocks are above their 5-year average

Badri added that OPEC is of the opinion that the current problem in the oil market has been created by all producers, but especially by non-OPEC states which raised their production sharply.

"Non-OPEC (states) increased their output by 6.0 million barrels per day in the past six years, and OPEC believes this is the reason for the glut in the oil market," he said.

Pointing out that global oil demand is projected to rise to 110 million barrels per day by 2040 from 93 million bpd now, Badri stated, "This requires investments of $10 trillion between now and then We need to keep investing; it is essential for our industry."

However in the current scenario, Badri, stated that global investments in crude Oil is expected to fall by $130 billion this year, thus reducing the global supply glut.

Kuwait Oil Minister Ali Al-Omair said OPEC's decision to keep its output target at 30 million barrels a day is the "ideal solution" to rebalance the market and support prices, The gap in crude oil supply and demand is due to close in the third quarter of 2016, Mohammad Ghazi Al-Mutairi, chief executive officer of state-run Kuwait National Petroleum Co, said at the same event.

In an emailed statement, acting OPEC president and Qatar's Energy Minister Mohammed Bin Saleh al-Sada expressed optimism that led by growing demand from emerging and developed markets, as well as the "substantially" lower supply from non-OPEC countries, will lead to price recovery. Already there are signs that oil price has "bottomed out" and would see a rise next year, he stated.

Al-Sada projected a demand growth for OPEC oil to 30.5 million barrels per day next year from 29.3 million bpd in 2015 because of stronger appetite in both developed and emerging markets, even as the growth in supply from non-OPEC producers seen over the past five years had substantially decreased in 2015 and is expected to see zero to negative growth in 2016.

Al-Sada pointed out that low oil prices have "caused oil companies to reduce their capital expenditure by almost 20 percent this year from $650 billion in 2014. This trend of reducing investment in the oil industry could result in production shortfalls down the line."> BNN

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