Global oil demand looks robust in a balanced market this year, Shaikh Nawaf Al-Sabah, chief executive of Kuwait’s state oil firm Kuwait Petroleum Corporation (KPC), told Bloomberg in an interview published on Thursday.
“From my perspective I think it remains a healthy market on the demand side,” the executive said, noting that rising U.S. shale production has helped meet part of the recent growth in world oil consumption.
Kuwait, one of the biggest producers in the Middle East and OPEC, is part of the several OPEC+ members who have announced extra voluntary production cuts for the first quarter of 2024.
This weekend, all these OPEC+ producers said they would roll over the production cuts until the end of the second quarter. The total cuts of 2.2 million barrels per day (bpd) will thus remain in place until June 2024, at least, and “will be returned gradually subject to market conditions,” OPEC said.
As part of these voluntary cuts, Kuwait has pledged to voluntarily reduce its crude oil production by 135,000 bpd.
Amid healthy global oil demand, OPEC+ also has extra spare capacity, which gives the market more stability, Kuwait Petroleum’s Shaikh Nawaf said.
“We all now have spare capacity, that’s also quite important for stability in the market, to know that there is additional capacity in case of a supply disruption,” the executive told Bloomberg in the interview.
Despite the current output cuts, Kuwait hasn’t given up on its plan to raise its oil production capacity to 4 million bpd by 2035, betting on continued strong demand, he added.
“It’s part of our strategy, because we believe that the call on Kuwaiti crude will reach that number,” Shaikh Nawaf told Bloomberg.
Kuwait’s optimistic view about near-term and long-term demand echoes OPEC’s outlook, which sees robust oil demand growth for both 2024 and 2025, and in the longer term.
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By Charles Kennedy for Oilprice.com
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