Baku, Azerbaijan, Nov.10
By Leman Zeynalova – Trend:
Oil demand growth is forecast to ease to 1.2 million barrels per day in 2016 and a similar expansion is foreseen in 2017, according to the Oil Market Report of the International Energy Agency (IEA).
IEA explains this with sharp slowdowns in the OECD (Organization for Economic Co-operation and Development) Americas and China.
IEA analysts believe that 2017 could be another year of relentless global supply growth similar to that seen in 2016.
“Russia will see its output increase by 230,000 barrels per day in 2016, and sustained production at current record levels would result in growth of nearly 200,000 barrels per day next year,” said the report. “With production also expected to grow in Brazil, Canada and Kazakhstan, total non-OPEC output will rise by 0.5 mb/d next year, compared to a fall of 0.9 mb/d in 2016. This means that 2017 could be another year of relentless global supply growth similar to that seen in 2016.”
According to IEA estimations, OPEC members pumped 33.8 million barrels per day in October, well in excess of the high end of the proposed output range.
“This means that OPEC must agree to significant cuts in Vienna to turn its Algiers commitment into reality,” said the report.
IEA analysts believe that if the OPEC countries do implement their Algiers resolution the resultant production cut will see the market move from surplus to deficit very quickly in 2017.
If no agreement is reached and some individual members continue to expand their production then the market will remain in surplus throughout the year, with little prospect of oil prices rising significantly higher, said the report.
In September, OPEC producers agreed during the informal meeting in Algiers to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC in November.