Global oil demand growth has slowed down this year on the back of the trade disputes and could be just 1 million barrels per day, but expectations are that as early as in 2020, demand growth will accelerate to 1.4 million bpd, Russia’s Energy Minister Alexander Novak said in an article in Russian-language magazine Energy Policy.
The prospect of 1 million bpd demand growth this year is generally in line with other forecasts saying that this year, oil demand growth will markedly slow down in view of the trade spats and slowing global economies. The International Energy Agency (IEA) and many other organizations and analysts, including OPEC, have trimmed their oil demand growth estimates several times this year already, and the IEA’s executive director Fatih Birol said that week that the agency could revise down again its demand growth expectations for this year and next.
Several key factors have impacted the global oil market in recent years, including the U.S. shale boom and the volatile oil prices, Novak wrote in the Energy Policy magazine which was presented at an ongoing energy forum in Moscow on Wednesday.
The rise in unconventional oil production will significantly impact the global oil market in the future, too, Novak said. But the single biggest oil market driver of the past five years has been the highly volatile price of oil, the minister said, noting that five years ago oil prices were $120 a barrel, only to drop to $27 per barrel in early 2016. The volatility took its toll on both oil producing nations and on oil companies, Novak said.
However, the OPEC+ production cut deal—in which Russia leads the non-OPEC nations in the pact—managed to stabilize the oil market, the minister writes.
Yet, Novak was quick to point out that the ongoing production restriction pact—currently until March 2020—is not permanent and will only be used in situations in which Russia needs it and only if it doesn’t go against Russia’s national interests.
By Tsvetana Paraskova for Oilprice.com
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