Secretary-general of the Organization of the Petroleum Exporting Countries (OPEC), Mohammad Sanusi Barkindo, says there is evidence to suggest that the oil market is now gradually realigning itself.
Barkindo said this in a speech he delivered at the 15th International Energy Forum currently going on in Algiers, Algeria.
In the speech posted on the cartel’s website, the OPEC scribe said that non-OPEC supply is expected to contract by 0.6 million barrels a day this year and oil demand growth is set to be 1.2 million barrels a day.
He, however, said a return to balance is taking time due to the persistently high stocks overhang.
Barkindo said that the current cycle of low oil price was supply-driven with most of the supply increases in recent years coming from generally high-cost non-OPEC production.
This he said has affected global exploration and production spending which fell by around 26 per cent in 2015, and a further 22 per cent drop is anticipated this year.
“Combined, this equates to a loss of more than $300 billion. This will impact not only new projects coming on-stream, but new discoveries too.” “We also need to appreciate how short-term developments and the current instability can impact the medium- and long-term.” The OPEC chief said oil will remain a fuel of choice as demand is set to increase by around 17 million barrels a day between now and 2040 to reach close to 110 million barrels a day. “This will require significant investments. New barrels are needed to not only increase production, but also to accommodate for decline rates from existing fields. Overall, we see oil-related investment requirements of around $10 trillion over the period to 2040.”
OPEC and Non-OPEC members are meeting on the sidelines of the Algiers energy forum today and Wednesday to revive a global deal to stabilise oil output levels.