Baku, Azerbaijan, Apr. 15
By Emil Ilgar - Trend:
OPEC's 17 April meeting with several non-OPEC producers over freezing the oil production level is unlikely to deliver real results, Wood Mackenzie said.
"Iran has declared it will not consider a freeze until it has returned to pre-sanction levels which isn't likely until 2017. With Iran ramping up output this year, Saudi Arabia said it does not want to accept a hold at January levels on its own production unless all OPEC members, such as Iran, also do so," Wood Mackenzie said in a press release.
Wood Mackenzie forecasted that OPEC output is to rise 0.5 million barrels per day (mb/d) year-on-year in 2016, with most of that growth coming from Iran and Iraq.
With or without an OPEC/non-OPEC freeze, the trend of lower global supply growth is already underway, the US oil supply is declining and globally the fundamentals are tightening, said the company's message.
"World oil demand outright will surpass supply by Q4 2016 necessitating a drawdown from inventories to meet demand and putting upward pressure on prices".
Wood Mackenzie reported that the intention of Doha meeting is to aim for a freeze on oil production for at least six months, and possibly until the end of 2016 and the idea of a production cut is not being considered.
The report added that Russian oil and condensate production reached a post-Soviet peak of 10.9 million barrels per day.
Also the Iraqi government reported January crude oil production at a record high, of around 4.5 million b/d. Whilst Iraq agrees with the sentiment of a plan to stabilize oil prices, it is still looking to grow output, and like Saudi Arabia, Iraq would not want to cede market share built up following the rebuilding of its oil industry,
"Iran's oil production has already increased by 375,000 b/d since sanctions were lifted on January 18. However, as we expected, this is less than the 500,000 b/d the country was planning," the report said.
The report added that for 2016, Iranian production is expected to grow by 450,000 b/d, much less than the 1 million b/d it had announced as the plan for 2016.