BAKU, Azerbaijan, Nov.3
By Leman Zeynalova – Trend:
OPEC-10 oil output is expected to reach 105 percent of its 2019 levels by 2023, driven principally by growth in Saudi Arabia, the UAE, Kuwait and Iraq, Trend reports with reference to Fitch Solutions.
Growth could exceed these levels, given that Saudi Arabia will continue to produce significantly below its maximum sustainable capacity, according to our forecast, the company believes.
“In light of the large expected oversupply and consequent price weakness, we expect the kingdom will continue to exercising production restraint next year, to help stabilize the market. Production increases beyond our forecast would erode the country’s strategically vital spare capacity and would likely exacerbate the downturn in Brent, undercutting revenues,” reads the latest report released by Fitch Solutions.
The company is also forecasting significant production growth in Iran over the coming 12-24 months, on the expectation that US secondary sanctions will be lifted, unleashing around an additional 1.2mn b/d of crude exports.
“Our view remains that a nuclear agreement will be reached in 2022. A number of hurdles remain, not least Iran’s demand that the US provide guarantees that future administrations will not renege on the deal, as former president Trump did. However, we believe that a deal is ultimately in the interest of both parties. It reduces geopolitical risk in the Middle East and will allow President Biden to focus on other pressing policy issues, while opening the door on economic recovery in Iran. The timing of any such deal is inherently difficult to pin down, but exports can increase immediately after sanctions are lifted, as Iran unwinds its storage barrels and ramps up output. We expect production to tick up over 2022, as negotiations progress, with the bulk of supply returning the following year.”
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