LONDON—OPEC and its allies face stiffening competition in 2020, the International Energy Agency said on Nov. 15, 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 a monthly report.
The IEA estimated non-OPEC supply growth would surge to 2.3 million barrels per day (bbl/d) next year compared to 1.8 million bbl/d 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 U.S. supply rose by 145,000 bbl/d in October, the IEA said, a slowdown in activity that started earlier this year looks set to continue as companies prioritize capital discipline.
Demand for crude oil from OPEC in 2020 will be 28.9 million bbl/d, the IEA forecast, 1 million bbl/d 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 bbl/d to the global oil supply increase in October of 1.5 million bbl/d.
“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 Nov. 17 in an initial public offering (IPO) that may raise between $20 billion and $40 billion.
It was the IEA’s last monthly report before the Dec. 5-6 talks among OPEC states and partners led by Russia on whether to maintain supply curbs aimed at buoying prices and balancing the market.
The agency kept its assessments for growth in global oil demand in 2019 and 2020 at 1 million bbl/d and 1.2 million bbl/d respectively, but said its outlook might slightly underestimate the impact of tariffs from the U.S.-China trade war.
The IEA said that if some or all tariffs were lifted in coming months, “world economic growth and oil demand growth would both rise significantly”, though the rebound may not be immediate.
Sluggish refinery activity in the first three quarters has caused crude oil demand to fall in 2019 for the first time since 2009, the IEA said, but refining is set to rebound sharply in the fourth quarter and in 2020.
Recommended Reading
U.S. Shale-catters to IPO Australian Shale Explorer on NYSE
2024-05-04 - Tamboran Resources Corp. is majority owned by Permian wildcatter Bryan Sheffield and chaired by Haynesville and Eagle Ford discovery co-leader Dick Stoneburner.
1Q24 Dividends Declared in the Week of April 29
2024-05-03 - With earnings season in full swing, upstream and midstream companies are declaring quarterly dividends. Here is a selection of dividends announced in the past week.
Analyst Questions Kimmeridge’s Character, Ben Dell Responds
2024-05-02 - The analyst said that “they don’t seem to be particularly good actors.” Ben Dell, Kimmeridge Energy Partners managing partner, told Hart Energy that “our reputation is unparalleled.”
Tellurian Reports Driftwood LNG Progress Amid Low NatGas Production
2024-05-02 - Tellurian’s Driftwood LNG received an extension through 2029 with authorization from the Federal Energy Regulatory Commission and the U.S. Army Corps of Engineers.
Zeta Energy Appoints Michael Everett as COO
2024-05-02 - Prior to joining Zeta Energy, a lithium-sulfur battery developer, Michael Everett previously served as president and COO at Advanced Battery Concepts.