A new report has revealed that the total oil supply from non members of the Organization of Petroleum Exporting Countries, OPEC, is expect to plummet to 56.4 million barrels per day (mbpd) in 2017, before rebounding to 57.5mbpd in 2020.
To this end, oil supply from OPEC members will have to increase considerably by 2020 by about 4.1mbpd to keep up with the sliding production from non-OPEC sources, the report from the Bank of America Merrill Lynch has said.
With oil prices recently reaching below $30 per barrel, current production from mature fields is set to decline at higher rates, the report said.
It added, “We estimate that OPEC needs to increase production by 4.1mbpd in the next five years to balance the market. Can Saudi’s self-reported 2.1mbpd of spare capacity fill half of this gap? Could OPEC countries, like Iran, Nigeria, or Venezuela, expand their capacity? And what will happen to the embattled Libyan and Iraqi production in this period?
“Our medium-term supply forecast has to uncomfortably assume that OPEC has the 2020 vision,” the report noted.
It stated further that “the structural shift toward a lower price environment will have profound and long-lasting consequences for non-cartelised production.”
Several fields in the United States Gulf of Mexico, Canada, and Brazil were initiated before the price crash will come online in the next three years.
