NIGERIA, OTHER OIL PRODUCERS FACE MAJOR CHALLENGE — IEA
The Organisation of the Petroleum Exporting Countries and its allies face stiff competition in 2020, the International Energy Agency has said, adding urgency to the oil producer group’s policy meeting next month. “The OPEC+ countries face a major challenge in 2020 as demand for their crude is expected to fall sharply,” the Paris-based agency said in its latest monthly report.
Reuters reported that the IEA estimated non-OPEC supply growth would surge to 2.3 million barrels per day next year, compared to 1.8 million barrels per day in 2019, citing production from the United States, Brazil, Norway and Guyana. “The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC+ ministers gathering in Vienna at the start of next month,” it added.
While US supply rose by 145,000 bpd in October, the IEA said, a slowdown in activity that started earlier this year looks set to continue as companies prioritise capital discipline. The IEA predicted that demand for crude oil from OPEC in 2020 will be 28.9 million bpd, one million bpd below the exporter club’s current production. The recovery by OPEC’s de facto leader, Saudi Arabia, from attacks on the country’s oil infrastructure contributed 1.4 million bpd to the global oil supply increase in October of 1.5 million bpd.
“With plans underway for the Aramco IPO and the persistent need for revenues to fund the government budget, Riyadh has every incentive to keep oil prices supported,” the IEA said. Saudi state oil company Aramco, the world’s most profitable firm, starts a share sale on November 17 in an initial public offering that may raise between $20bn and $40bn. It was the IEA’s last monthly report before the December 5 to 6 talks among OPEC states and partners led by Russia on whether to maintain supply curbs aimed at buoying prices and balancing the market.