OPEC expects demand for its crude oil to average 31.4 million bpd in 2019, down by 100,000 bpd from last month’s forecast, which suggests that the cartel would need to strictly stick to the new production cuts and rely on continued declines from exempt members Iran and Venezuela if it wants to prevent an oversupply.
In its closely watched Monthly Oil Market Report, OPEC said on Wednesday that demand for OPEC crude in 2019 was revised down by 100,000 bpd compared to the previous report to stand at 31.4 million bpd—down by 1.0 million bpd lower than the 2018 level.
OPEC’s crude oil production in November, on the other hand, averaged 32.97 million bpd, down by 11,000 bpd compared to October, as Saudi Arabia massively increased its oil production to an all-time high, while Iran’s production plunged. Crude oil production in Saudi Arabia surged by 377,000 bpd from to 11.016 million bpd in November, according to OPEC’s secondary sources, while Iranian production plummeted by 380,000 bpd to below 3 million bpd—2.954 million bpd. The other notable increases were in the United Arab Emirates (UAE) and in Kuwait, who, together with Saudi Arabia, moved in to anticipate a plunge in Iranian oil exports when U.S. sanctions on Tehran’s oil returned.
After Iran, the second-largest oil production slump in November came from Venezuela, whose crude production plunged again, by 52,000 bpd to stand at 1.137 million bpd. Related: Global Market Turbulence Caps Oil Prices
OPEC’s December MOMR was the first in five months which didn’t cut forecasts for the world oil demand growth for 2018 and 2019, although the cartel pointed out that risks are more skewed to the downside for next year. In 2018, global oil demand is seen rising by 1.50 million bpd, while demand in 2019 is seen up by 1.29 million bpd.
“Rising trade tensions, monetary tightening and geopolitical challenges are among the issues that skew economic risks even further to the downside in 2019. The upside appears limited, but is mainly resulting from a resolution of trade-related issues and the possibility of slower than currently anticipated monetary policy normalization by G4 central banks,” OPEC said.
Non-OPEC oil supply growth for 2019 was revised down by 80,000 bpd to 2.16 million bpd, due to a lower forecast for Canada with Alberta’s mandatory production cut, and a downward supply forecast for the 10 non-OPEC participants in the OPEC+ deal in the first half of 2019.
By Tsvetana Paraskova for Oilprice.com
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