Baku, Azerbaijan, Dec. 2
By Aygun Badalova - Trend:
For OPEC 2015 has been very difficult and there is little sign of the pain ending soon, head of analysis at Lloyd's List Intelligence Neil Atkinson believes.
"The raw numbers are horrible: oil revenues peaked in 2012 at $1.6 trillion dollars when the value of Brent crude oil averaged $112 a barrel. This year Brent crude oil will average $50 a barrel and OPEC will struggle to earn $750 million," Atkinson told Trend.
And on November 4, in Vienna, oil ministers from OPEC member countries will meet to examine the state of the oil market and assess what might happen in 2016.
"The ministerial meeting will, to some extent, resemble survivors of an earthquake looking through the rubble for signs of life: as the ministers look into 2016 all they can see is faltering oil demand growth and little relief from the chronic oversupply that has dogged the market since 2014," Atkinson said.
IEA forecasts global oil demand growth to slow to 1.2 million barrels a day in 2016 after surging to 1.8 million barrels a day this year.
Global oil supplies amounted to 97 million barrels per day in October, according to the IEA. Despite the resilience of producers such as Russia, non-OPEC supply is forecast to contract by more than 0.6 million barrels per day next year. US light tight oil, the driver of non-OPEC growth, is expected to decline by 0.6 million barrels per day in 2016.
Atkinson mentioned that in November 2014, OPEC had an historic meeting where cartel members decided to abandon their traditional response to falling prices of cutting production and instead to focus on preserving market share.
Oil prices have been experiencing dramatic fall since the middle of 2014. The position of Saudi Arabia, which is the largest producer and exporter within OPEC, has been an obstacle in cartel's quota reduction.
OPEC last met this summer in Vienna, when it agreed to leave its production ceiling unchanged at 30 million barrels per day.
Atkinson also mentioned the plans of Iran to increase its export after the sanctions are lifted.
In particular, Iran believes lifting the sanctions could increase the supply of Iranian oil to the world energy market by half a million barrels per day next year. With this regard Iranian Oil Minister Bijan Namdar Zanganeh Ahead of the upcoming OPEC meeting has asked the cartel to reduce production by at least 1.3 million barrels per day.
Atkinson believes that whatever success Iran does achieve could, perversely, support the Saudi-led OPEC strategy of keeping oil prices low to limit investment in high-cost production areas.
"It is possible to construct an oil market supply/demand balance for 2016 that sees production from the United States and some other non-OPEC countries fall but by less than a possible increase in Iranian supply," Atkinson said adding that this will ensure that oil prices stay lower for longer.