Home News OPEC, Russia Agrees to Cut Oil Production 500,000 Barrels

OPEC, Russia Agrees to Cut Oil Production 500,000 Barrels

The 17th Meeting of the Joint Ministerial Monitoring Committee took place at the OPEC Secretariat in Vienna - Photo by OPEC Secreatriat

JAKARTA (TheInsiderStories)- Organization of the Petroleum Exporters Countries (OPEC) and Russia agreed to make a further cut of oil production around 500,000 barrels per day until March 2020, foreign media reported yesterday (12/05). The organization currently produces 29.7 million barrel per day (mb/d) or about 30 percent of global output, which is 2.6 mb/d fewer than a year ago.

Manuel Salvador Quevedo Fernandez, Venezuela’ minister of petroleum and president of the OPEC Conference 2019 led the 17th Meeting of the Joint Ministerial Monitoring Committee in Vienna, Austria.

Before the meeting, the 2019 OPEC World Oil Outlook has released. At the report, the members sees total primary energy demand is set to expand by a robust 25 percent between 2018 and 2040.

“All forms of energies will be required in the future to help to meet expanding demand in a sustainable way, balancing the needs of people in relation to their social welfare, the economy and the environment,” said the report.

Natural gas witnesses the largest demand growth in absolute terms, and renewables the largest growth in percentage terms. It said, oil is expected to remain the fuel with the largest share in the energy mix throughout the forecast period to 2040.

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.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com