The Middle East oil and gas exporters are considered to be highly affected as the US energy exporters gaining more market shares in Asia, according to 63 per cent of industry executives polled in a Gulf Intelligence Survey
Almost a third of the survey respondents, a cross section of energy stakeholders in the UAE and the UK polled ahead of the 2nd Gulf Intelligence Middle East Energy Summit at International Petroleum (IP) Week in London from 20- 22 February 2018, said that African producers would also be hugely impacted from the fast growing US customer base in China, India and across Asia.
In the period 2011-2016, global oil demand increased 8.6 per cent with the exception of Europe. This led to a shift of focus by Middle East suppliers from Europe to Asia, with exports to the east increasing from 2.8 mmbbl a day to 3.7 mmbbl per day.
In parallel, the advent of the US shale has placed that country’s oil output at above 10 mmbbl per day, matching Saudi Arabia and seen potentially hitting 11 mmbbl per day in 2018 in line with Russia. This new dynamic has brought the US new customers in both Europe and Asia, with most exports landing in China, now the second largest buyer of the US crude after Canada.
The US oil and gas has also landed on Arabian Gulf shores in the past year, with the UAE and Kuwait both taking cargoes. About 68 per cent of the GIQ survey respondents expect this trend to continue.
On the future direction of oil prices, 80 per cent of survey respondents were of the view that Brent crude would average in the US$60s/bbl range in the first half of 2018. About 10 per cent were more optimistic, placing the average in the US$70s while 10 per cent saw it dropping back to the US$50/bbl range.
The OPEC/non-OPEC agreement to slash total production by 1.8 mmbbl per day during 2017 and extended through 2018, has so far propelled a recovery in Brent oil prices from their lows in 2015 and early 2016 when they dipped under US$30/bbl. Prices broke through the US$70/bbl mark in October 2017 on the back of a very successful level of compliance throughout the year by oil producers to the output cut deal, as well as continued growth in global oil demand. In the last few weeks, prices have settled back into the US$60s.
The Gulf Intelligence survey audience was split 50/50 on whether geopolitics or oil supply cuts would have the greater influence on oil prices in the coming year. This compares to a similar GIQ survey conducted in mid-January where two thirds of respondents felt the former would play the weightier role.
The 2nd Gulf Intelligence Middle East Energy Summit, in partnership with the Fujairah Oil Industry Zone (FOIZ), is part of IP Week hosted by the Energy Institute, and is set to gather members of the energy community from the region and beyond to exchange knowledge and intelligence on the most pressing issues facing the industry.
