Oil prices to recover to $70/bbl by 2020: OPEC
OPEC expects global oil demand to rise to 97.4 million barrels of oil per day (bpd) by 2020, a slight rise of 500,000 bpd compared to last year’s outlook. By 2040, meanwhile, the cartel predicted overall demand to be around 110 million bpd, down about 1 million bpd from last year’s forecast.
OPEC also reported that oil production in non-OPEC countries will decline in 2016 and OPEC countries will fill the gap arising from a lack of supply from its rivals. By 2020, OPEC expects non-OPEC countries’ oil production to reach 60.2 million bpd, down 1 million bpd from last year’s projections, adding that demand for OPEC oil will increase by 1.7 million bpd by 2020 compared with their expectations in the previous year.
In its latest World Oil Outlook, OPEC also stated that lower prices may cause a decrease in oil investments, which may result in a lack of new capacity and infrastructure to meet future rising demand levels in upcoming years. OPEC hinted that they are ready to invest in the development of new capacities if market incentives fail to support additional investments.
Earlier this month, OPEC refrained from cutting its output target at the group’s meeting in Vienna. The cartel is currently producing around 31.5 million barrels per day (bpd) and has persistently remained above its most recent production target of 30 million bpd. No new production target or policy guidance emerged from the group’s latest meeting.
Oil prices have been following a softening note since the middle of 2014 due to oversupply issues and weak global demand. Currently, oil prices are standing at multi year lows due to an already oversupplied market and weak demand. In addition, oil markets are under additional pressure from Iran’s plans to expand production following an expected easing of sanctions and the US Congress’ decision to end a 40-year ban on oil exports.
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