OPEC Chief Bullish on Oil Demand, Pushes for Extended Partnership in Output Management

Global demand for oil predicted to reach 100 million barrels per day (bpd) later this year. File Image / Pixabay

As far as the secretary of the Organization of the Petroleum Exporting Countries (OPEC) is concerned, global demand for oil will reach 100 million barrels per day (bpd) later this year, much sooner than expected.

Mohammad Barkindo, while addressing an energy conference in Cape Town, South Africa, said, "The world will attain the 100 million barrels a day mark of consumption later this year, much sooner than we all earlier projected; therefore stabilizing forces which create conditions conducive to attracting investments are essential.

"The priority ... is on ensuring stability is sustainable, spreading confidence in the industry and encouraging an environment conducive to the return of investments."

Barkindo, whose organization seems to have lost some of its media luster amid an industry in which the balance of power is shifting toward the west, also stated that confidence in the oil sector is returning and despite global trade disputes potentially harming demand in the future, he is hopeful the uncertainty will abate soon.

He opined, "We are confident ... these parties will be able to overcome some of these challenges; we are hopeful we will be able to overcome this cloud of uncertainty regarding trade as quickly as we can in order to mitigate the contagion."

In addition to witnessing the predominance of U.S. production over the past year, OPEC has of late suffered widespread speculation from the analytical community that its combined forces won't be able to make up for shortfalls in output from countries such as Iran and Venezuela; perhaps with this in mind, Barkindo told reporters on the sidelines of the energy conference that OPEC plans to finalize a long-term cooperation pact to help manage the global oil market with Russia and other allies at its next meeting in December.

He said, "Every country is submitting their input because it's a multilateral process until we get all their input, then we'll sit down and synthesize; I think the market has now accepted the declaration of cooperation as a permanent feature in the world oil market, therefore the industry will expect us to continue this partnership, continue in this role of trying to restore stability on a sustainable basis."

A draft charter seen by media calls on ministers of the 24-country coalition to meet at least once a year to discuss output policy and review supply and demand fundamentals.

Unsurprisingly, the secretary general dismissed allegations that his organization is in a state of disarray, with Iran insisting an agreement made in June binds countries to their individual output quotas, while Saudi Arabia and allies claiming the quotas no longer apply.

He said, "In June, all the conference did was to urge the countries to strive to return to 100 percent, [which] would require additional supplies to the market; there is no disagreement either within OPEC, or between OPEC and non-OPEC on that decision."

If nothing else, OPEC seems to be proving its critics wrong in terms of its ability to produce mass volume of crude at will: August production hit a 2018 high of 32.79 million barrels per day, thanks to a recovery in production from Libya, a modest rise in Nigeria, and Iraq pumping at record levels.