Baku, Azerbaijan, Feb. 28
By Gulgiz Muradova – Trend:
The major oil producers will remain committed to the OPEC+ process, as there is still some room for storage reduction in place, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY and SVP MEA-Risk, told Trend.
"The commitment of the strongest producers is there, Russia-Saudi have recommitted to keeping the deal in place, while the UAE's energy minister has been hitting the news the last days by reiterating that this needs to be done. He will make sure that all players, including Russia and the former Soviet union flock, will be following suit," Widdershoven said.
Saudi Minister of Energy, Industry and Mineral Resources Khalid A. Al-Falih previously said that OPEC and non-OPEC countries that agreed to the oil production freeze last year are willing to cooperate after the agreement expires, that is, from 2019. In this regard, representatives of the largest oil-producing states believe that it is premature to discuss an exit from the pact.
In addition, in February, OPEC improved its forecast for the growth of world oil demand in 2018 to 98.6 million barrels per day.
Widdershoven believes that it will be interesting to see what the real oil demand forecasts are going to be.
'For 2018-2019 maybe demand will be even higher than currently stated, looking at the overall growth of the global economy. A small increase of growth in China or India will be much more having an impact than 3 percent growth in the OECD countries," he said.
Noting that India, Latin America and Africa will be the regions to watch the coming months, the expert stressed that there is also no threat coming from US shale as this is not a swing producer, investment needs are increasing while this needs to be kept going on for years to come.
"Dont underestimate the fact that the world has not invested $1 trillion needed in upstream in the last 4-5 years. We are lagging behind and this will become obvious in the coming 1-3 years," he said.
Furthermore, there is a growing lack of downstream refinery capacity for light crudes, according to him.
"Shale mostly produces at present light, so if there is no utilization options, prices for these products will collapse. The latter will hit shale possibly very soon, leaving production versus revenues streams a real option," he noted.
Asked how long the oil nations can keep the pace, Widdershoven said that most of the current production leaders will be able to keep this in place very long.
"It just depends on their assessments if this is still a good idea if prices increase too much. They also will not be letting shale to become again a very healthy financially attractive sector," he concluded.