World oil demand in 2015 is expected to grow by 1.28mn bpd, following an upward revision of 0.10 mn bpd since June 2015, OPEC has announced in its monthly report
In 2016, world oil demand growth is forecast to pick up, reaching 1.34mn bpd. OECD demand is expected to register positive growth of 0.18mn bpd, while non-OECD consumption is projected to grow by 1.16mn bpd.
Meanwhile, the IEA’s monthly oil market report for July 2015 shows that OPEC crude oil output climbed by 340,000 bpd in June to 31.7mn bpd — the highest since April 2012 -marking another record-breaking month for Middle East producers.
Supply from Iraq, including the Kurdistan Regional Government (KRG), rose to 4.1mn bpd — the highest-ever rate, despite the twin challenge of low oil prices and the costly struggle against IS.
“The outlook for Iraqi capacity growth — accounting for most projected OPEC expansions — keeps improving,” IEA said.
Saudi Arabia, in particular, has pushed up its oil production exceeding 10.3mn bpd in June, which is a record high, industry sources say. The UAE also lifted output to an all-time high of 2.9mn bpd.
Robust pumping in June put OPEC’s supply 1.5mn bpd above the previous year and a whopping 1.7mn bpd above its official 30mn bpd supply target.
Non-OPEC oil supply growth in 2015 has been revised up by 180,000 bpd to stand at 860,000 bpd, mainly driven by OECD Americas, Latin America and the FSU. In 2016, non-OPEC oil supply is projected to grow by 300,000 bpd to average 57.69mn bpd.
OPEC NGLs are expected to grow by 170,000 bpd in 2016, down from 190,000 bpd in the current year. In June, OPEC production increased by 283,000 bpd to average 31.38mn bpd, according to secondary sources.
The global oil market should be more balanced next year as China and the developing world increase oil consumption while supply of shale oil from North America and other regions grows more slowly, OPEC said.
This would outpace the growth of oil supply from non-OPEC sources and ultra-light oils such as condensate, increasing demand for OPEC crude oil, it added.
OPEC revealed that it expected demand for its own crude oil to rise by 860,000 bpd in 2016 to 30.07mn bpd. But it cut its estimate of demand for its crude this year by 100,000 bpd to 29.21mn bpd.
According to the monthly report, USA’s oil output, which has seen rapid increases over the last five years thanks to the development of huge shale resources by fracking, is expected to log much more modest supply growth in 2016.
World oil supply has grown much faster than demand this year, led by OPEC as its core members in the Middle East Gulf attempt to build market share, leading to higher inventories.
OPEC estimated, based on figures from secondary sources, that its own group crude oil output rose 283,000 bpd to 31.38mn bpd in June, led by Iraq, Saudi Arabia and Nigeria.
Meanwhile, Iran recently has made clear its intention to lift exports as soon as the ink dries on an accord with the P5+1, according to the IEA.
Iranian oilfields are estimated to be capable of pumping up to 3.4mn bpd to 3.6mn bpd within months of sanctions being lifted, the agency noted, and could raise exports immediately out of floating storage, with at least 17mn barrels of crude oil ready to be shipped.
Since November 2014, when OPEC agreed its strategy to defend market share at the expense of price, supply has risen by 1.3mn bpd, the IEA said.
“Indications are that flows will remain well above the 31mn bpd market during the coming months. The fall in oil prices is testament to the continued headwinds facing the oil industry,” commented the IEA. “The rebalancing that began when oil markets set off on an initial 60 per cent price drop a year ago has yet to run its course. Recent developments suggest that the process will extend well into 2016 …. the bottom of the market may still be ahead.”
