EMEA News
Iran, Nigeria, Angola Aiming to Boost Production Despite OPEC Curbs
The bearish sentiment that on Thursday returned full force due to continued crude price losses was accompanied by strong signs that the tentative return of a proper global supply and demand balance will soon evaporate.
Amir Zamaninia, oil minister for Iran, told a conference in Paris that his country is planning to pump all-out in the near future: "We are striving - to be very cautious and not ambitious - for the next 3, 4 years we are planning to increase our production by about 700,000 taking our production to 4.7 million barrels per day [bpd]."
He added that if the Islamic republic is able to close deals on the development of four of its oil fields with international companies, production may rise by as much as 1 million bpd.
Not to be outdone, impending field start-ups in Angola and Nigeria in 2018 will add 430,000 bpd to the market, according to Bloomberg.
Total on Thursday announced it plans to start production at two so-called mega-projects, Kaombo in Angola, and Egina in Nigeria; Bloomberg points out that "the latest supply data from Angola and Nigeria show that the additional barrels planned for this year would cause both to flout their OPEC commitments should their output remain otherwise unchanged."
It's unclear how these ambitions, if fully realized, will affect the will of Organization of the Petroleum Exporting Countries (OPEC) members to continue or at least fully abide by the cartel's production cutback strategy: it has long been argued, based on past incidents, that many members were never serious about following the cuts and will use any excuse to pump all out if others do so.
On the other hand, news of major producers declaring they will increase output regardless of what shape the market is in has been greeted with a response that, on Thursday, was reiterated by Bilal Khan, senior economist MENA, Pakistan for Standard Chartered Bank.
When asked if the winds are turning against OPEC, Khan told Bloomberg television that Brent will continue to consolidate lower at around $61 per barrel in 2018 and that "I think there is some disconnect between fundamental and what we're seeing in terms of pricing."
But, "we are looking at global oil demand of over 1.6 million barrels a day in 2018: so in a sense, even accounting for the non-OPEC supply from North America in particular...we still think on a fundamental basis that the market will continue to be supported over 2018."
Compared to the view of S&P Global Platts Analytics, Khan's mindset that demand will trump overproduction is conservative: Platts recently disclosed that it suspects the remaining global excess of crude compelling OPEC to continue its output cuts is in fact far smaller than reported, and that the cartel's efforts will result in an overtightened market.
