Opec says it expects higher crude prices next year but is yet to be ready to cut its output and risk allowing rivals to grab market share.
“We are following the market day in day out, month in month out. We see that 2016 is really producing some positive results,” said Abdalla El Badri, Opec’s secretary general, at the Adipec oil and gas conference in Abu Dhabi yesterday.
The 12-member organisation, which produces about 40 per cent of the world's crude oil, meets next on December 4 in Vienna. It will decide on its output policy, which is focused on protecting market share rather than propping up prices by reducing its output.
Opec had kept its production ceiling at 30 million barrels per day at its meeting in June.
“Opec is not really a swing producer as such,” said Mr El Badri. “We always protect our share in the market. Now we are 40 per cent. It is not possible to go lower than 40 per cent.”
The oil supply glut, weaker demand in Asia and Europe, and a strong US dollar has slashed the price of the crude benchmark Brent to less than US$50 per barrel from more than $100 per barrel last year.
Mr El Badri blamed non-Opec producers for the oversupply and criticised them for not heeding Opec calls for coordinating production to help boost prices.
“The non-Opec supply is the main reason for oversupply in the market,” said Mr El Badri. “We have to share the burden between Opec and non-Opec [producers].”
Opec’s policy of protecting its market share has squeezed out high-cost producers such as shale oil companies in the United States, which have reduced their production this year.
US shale oil production is forecast to drop for the eighth month in a row to 4.95 million bpd next month, 118,000 bpd less than this month, said the US Energy Information Administration this week.
Growth in non-Opec oil supply could stop by 2020 if spending cuts continued to hit the industry, warned the International Energy Agency, the Paris-based energy adviser to industrialised nations.
The oil price rout had led to a 20 per cent drop in exploration and production investment to $130 billion this year from last year, said Mr El Badri.
Non-Opec oil supply is forecast to fall by 0.13 million bpd next year, according to Opec estimates. The demand for Opec crude next year is forecast at 30.8 million bpd, 1.2 million bpd more than this year’s demand.
Opec produced 31.57 million bpd in September, above its official ceiling, mostly owing to higher production in Iraq, Nigeria and the UAE, the organisation said in its October monthly report, citing secondary sources.
Next year, global oil demand is set to rise by 1.25 million bpd to reach 94.11 million bpd, according to Opec estimates.
dalsaadi@thenational.ae
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