EMEA News
Kuwait Expects Market Balance Early This Year While BP Says Oil Demand Moving Forward Will Slow Significantly
On the same day Kuwait predicted that the Organization of the Petroleum Exporting Countries (OPEC) cutback agreement will balance the market early this year, BP forecast that demand growth will slow and supplies will remain abundant over the next few countries - resulting in the Middle East, Russia, and U.S. gaining market share over higher-cost competitors.
BP in its Energy Outlook 2035 report released Wednesday said demand will grow over the next two decades at half the rate seen in the past 20 years, at an average of 0.7 percent annually; Spencer Dale, chief economist for BP, stated, "The most important source of growth....in the 2030s won't be to power cars or trucks or planes, but rather used as an input into other products, such as plastics and fabrics."
Dale added that increasing energy efficiency, renewables, and electric cars will also impact demand, which he thinks could peak by the mid 2040s; plus, the world has enough oil - about 2.6 trillion barrels of technically recoverable reserves, with about 1.7 trillion located in the Middle East, North America, and the former Soviet Union - that can be extracted with current technologies to meet double the demand until 2050, he said.
While oil demand as forecast by BP is anemic, the production giant predicts that global energy demand will increase by about 30 percent to 2035, and that natural gas consumption will outstrip oil and coal growth at 1.6 percent a year (shale gas production led by the U.S. will reportedly account for two thirds of the increase in supplies).
But if oil is on its way out as BP and other experts anticipates, it hasn't fazed Kuwait, which plans to increase production capacity to 4 million barrels per day by 2020 and maintain that level until 2040, according to that country's oil minister, Essam Al-Marzouk.
Speaking on Wednesday at a news conference in Kuwait City, Al-Marzouk said that oil will trade at $55 to $60 a barrel this year and his country will assume a $45 price in its budget for fiscal year 2017-18.
For the meantime, however, the oil minister is chiefly concerned about all parties fully adhering to OPEC's cutback agreement: "The production data for January will come out on February 17, so we will look at the numbers and decide how committed everyone is.
"We will not accept any compliance rate other than 100 percent from all producers."
Al-Marzouk expressed his faith in full compliance being achieved, which he said will bring global crude markets into balance early this year.
As dramatic as BP's predictions about oil's future may seem, they're conservative compared to those of Royal Dutch Shell Plc, which in November said alternative forms of energy could cause world demand to peak in as little as five years.
