OPEC’s Production To Drop By 27mbpd In 2024

Daily oil production by the Organisation of Petroleum Exporting Countries(OPEC), would to slip below 27 million barrels per day (bpd) by 2024.

This is as oil industry analysts have predicted that international oil prices would likely stay near $80 a barrel in 2024.

Analysts also predicted that weak global growth would cap demand, while geopolitical tensions could provide support.

The last time OPEC saw its market share fall to that level was at the height of the COVID-19 pandemic when global oil demand fell by nearly 20 per cent.

The gap is less than 27 per cent of the total global supply of 102 million bpd, following Angola’s exit from the group.

Earlier in December, Angola, officially announced its exit from OPEC over disagreements regarding its oil production quotas.

RELATED


The country’s crude output clocked in at 1.15 million barrels per day in November, a sharp decline from 1.88 million barrels per day in 2017, one year after it joined OPEC thanks in large part to under-investments in its aging, deep water oil fields.

The OPEC has managed to maintain a market share in the 30-40 per cent range, according to Reuters.

However, record shale production by the United States has cut into that deeply. U.S. oil output hit an all-time high of 13.1 million barrels per day in the current year mainly due to efficiency and productivity gains by drillers in a bid to combat low oil prices.

Some analysts have forecast a slacking of U.S. oil output increase will slacken in the New Year, but many others view the estimates from the Energy Information Administration (EIA) as too conservative for 2024.

The organisation believes the market share loss might only be temporary as it predicts that its global market share will come in at 40 per cent in 2045 largely due to non-OPEC output declining from the early 2030s.

The OPEC has forecast global oil demand will hit 116 million barrels a day (bpd) by 2045, 6 million bpd higher than expected in last year’s report, driven by growth demand by India, China, India, Africa and the Middle East.

India has been tipped to replace China as the main driver of global oil demand growth thanks mainly to a rapidly expanding population.

Further, the country’s transition to renewable energy is expected to be much slower than China’s with the country recently backing coal-fired electricity generation.

Meanwhile, analysts questioned whether the OPEC+ would be able to sustain supply cuts to support the market.

The global benchmark Brent crude has averaged around $82.17 a barrel so far this year and was poised for an over 9 per cent yearly decline as a strong U.S. dollar boosted by a high interest rate environment and subdued demand from top consumer China weighed.

A Reuters survey of 34 economists and analysts forecast Brent crude would average $82.56 in 2024, down from November’s $84.43 consensus. Just one contributor expected prices to average above the $90 mark next year.

U.S. crude was seen averaging $78.84 next year, from $80.50 last month.

“From the demand side we do not expect much impetus in the months to come,” said Thomas Wybierek, analyst at NORD Landbk.

“There is still a question mark behind the supply side. There are a lot of doubts (on whether) the OPEC+ alliance will be capable to reduce supply as decided recently.”

Last month, OPEC+ oil producers agreed to voluntary output cuts totalling about 2.2 million barrels per day for early next year led by Saudi Arabia rolling over its current voluntary cut to support the market.

OPEC+ is cutting some 6 million bpd from its output and its market share has fallen to 27 per cent.

“While it is difficult to maintain cooperation with all the members of OPEC+ at this time and price level all members are supportive of higher oil prices,” said John Paisie, president of Stratas Advisors.

Analysts polled also said geopolitical risks would keep oil prices volatile in the coming months.

“We think that there will be a greater concern about geopolitics in 2024 than in 2023 – and the associated risk premium will be substantially higher,” Paisie added.

Military clashes between Israel and Hamas sparked worries that a wider conflict could hit supply from the Middle East, the world’s biggest oil-supplying region. The latest attacks on ships in the Red Sea prompted fears of shipping disruptions.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Next Post

Enhancing Nigeria’s Revenues Through Taxation

Sun Dec 31 , 2023
Nigeria’s tax system is an instrument of domestic resource mobilisation, and a reliable contribution to the country’s fiscal revenue through its Ministries, Department and Agencies (MDAs), though, its remittances have not been commensurate with the economic size. The Federal Inland Revenue Service (FIRS), the federal tax collector, said it was […]

You May Like

Share via
Copy link