OPEC expects supplies from its rivals to increase by the most in five years in 2019, with extra oil from the US alone sufficient to meet the growth in global demand.
In its first detailed outlook for 2019, the Organization of Petroleum Exporting Countries indicated that the North American oil boom means OPEC members are already producing enough crude to cover what will be needed from them.
That could still change, however, as the group’s output is threatened by a spiraling economic crisis in Venezuela and renewed US sanctions on Iran.
“If the world economy performs better than expected, leading to higher growth in crude demand, OPEC will continue to have sufficient supply to support oil-market stability,” the organization’s secretariat in Vienna said in the report.
Global oil demand will climb by 1.45 million barrels a day in 2019, slightly below this year’s growth rate, to average 100.3 million barrels a day, according to the report.
The growth in non-OPEC supply will be considerably stronger though, at 2.1 million barrels a day, the most since 2014. Though the shale-oil boom is slowing because of pipeline constraints, the US will still contribute about three-quarters of the global supply expansion, enough to meet the growth in world consumption.
RIVALS RAMP UP
That surge reflects how output curbs by OPEC over the past 18 months have emboldened the group’s rivals, giving shale drillers and other producers the higher prices they needed to resume operations.
As a result, OPEC’s 15 members will need to provide an average of just 32.2 million barrels a day next year, slightly below the 32.3 million they pumped in June. Maintaining that level, however, will be a contentious process.
Venezuela’s output continues to sink to the lowest in decades as its economic meltdown takes a toll on oil infrastructure and workers.
More crucially, Trump’s administration is trying to choke off exports from Iran after quitting a nuclear accord with OPEC’s third-largest producer.
The Saudis have raised output by 405,400 barrels a day to 10.42 million, the biggest jump in more than three years, according to OPEC.