JAKARTA (TheInsiderStories) – Organization of the Petroleum Exporting Countries (OPEC) members are considering holding an emergency meeting in February after oil prices slumped on concern the spread of coronavirus will hit oil demand, Algeria pers reported today (01/30).
According to Algeria’ energy minister, Mohamed Arkab, the decision may be taken in the coming days. Based the initial plan, the organization and its allies are set to meet on March 5 – 6 to discuss the future of oil production that expire at the end of March.
An outbreak of the virus has left 7,800 people infected and 170 dead since the first case was reported on Dec. 30 in Wuhan, Hubei province, China. Some officials, sees several options to decide during the coming meeting, such as extending the current agreement or cutting deeper.
The United States (US) crude oil inventories also kept pressure on the oil prices. On Thursday, Brent crude oil price was down 1.6 percent to US$58.86 a barrel and American crude also dropped 1.6 percent at $52.49 a barrel.
In the last meeting, OPEC and its allies has recalling the ‘Declaration of Cooperation’ (DoC) reached on Dec. 10, 2016. Reaffirming the continued commitment of the participating producing countries in the DoC to a stable market.
The 7th OPEC and non-OPEC Ministerial Meeting decided for an additional adjustment of 500,000 barrels per day (bpd). These lead to total adjustments of 1.7 million barrels a day (mb/d). In addition, several participating countries, mainly Saudi Arabia, continued their additional voluntary contributions, leading to adjustments of more than 2.1 mb/d starting Jan. 1, 2020.
The organization currently produces 29.7 mb/d or about 30 percent of global output, which is 2.6 mb/d fewer than a year ago.
OPEC sees oil demand is forecast to reach 110.6 mb/d by 2040. The non-OECD drives oil demand with growth of 21.4 mb/d by 2040 compared to 2018, whereas the OECD region is expected to contract by 9.6 mb/d.
Long-term demand growth comes mainly from the petrochemicals (4.1 mb/d), road transportation (2.9 mb/d) and aviation (2.4 mb/d) sectors. The total vehicle fleet – including passenger and commercial vehicles – is estimated to grow by more than 1 billion by 2040 to around 2.4 billion.
The long-term share of electric vehicles in the total fleet is projected to reach a level of around 13 percent in 2040, supported by falling battery costs and policy support, but the majority of the growth continues to be for conventional vehicles.
In addition, non-OPEC liquids supply is projected to grow by 9.9 mb/d between 2018 and 2024, the majority coming from US tight oil, but from the mid-2020s non-OPEC sees a steady decline. Demand for OPEC liquids is projected to increase to around 44.4 mb/d in 2040, up from 36.6 mb/d in 2018.
Crude distillation capacity additions of around 8 mb/d are expected between 2019 and 2024, with over 70 percent in the Asia – Pacific and the Middle East. This is close to 50 percent of the total capacity additions required in the long-term to 2040.
Global crude oil and condensate trade is estimated to remain relatively static at around 38 mb/d between 2018 and 2025, before increasing to around 42 mb/d by 2040. The United States and Canada is expected to increase crude and condensate exports in the medium-term.
Over the entire forecast period, the major oil trade route remains the Middle East to the Asia-Pacific. The organization also predicted, in the period to 2040, the required global oil sector investment is estimated at $10.6 trillion.
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