[DOHA] Global demand for crude will bring more balance to the oil market as soon as next year even with Iran preparing to increase output, according to Opec Secretary General Abdalla El-Badri and Pulitzer Prize-winning author and energy consultant Daniel Yergin.
Demand will rise by about 17 million barrels a day to almost 110 million barrels a day by 2040, with 70 percent of the growth to come from Asia, the head of the Organization of Petroleum Exporting Countries said at an industry event in Doha. The oil market will rebalance in 2016 or 2017, as demand grows between 1.2 million barrels a day and 1.5 million barrels a day through 2020, Mr Yergin, vice chairman of consultants IHS, said in a speech in Abu Dhabi.
"The expectation is that the market will return to more balance in 2016," Mr El-Badri said Monday. "We see global oil demand maintaining its recent healthy growth. We see less non- OPEC supply." Mr El-Badri said on Tuesday in Abu Dhabi he was "very happy that Iran is back," referring to the Opec member's steps to boost output once sanctions are lifted from its economy. Iran and the rest of OPEC "can work together" to accommodate additional Iranian crude. "We can do anything for Iran, no problem," Mr El- Badri said, without elaborating.
Oil tumbled more than 48 per cent last year as US stockpiles and production expanded, creating a global oversupply that the International Energy Agency estimates will persist until at least the middle of 2016. Opec's strategy to defend market share has exacerbated the glut as the group, which kept its production target unchanged at 30 million barrels a day at the last meeting in June, exceeded the ceiling for the past 17 months. Brent crude, a global benchmark, was trading 9 cents lower at US$47.10 a barrel in London at 1:51 pm local time. Tuesday. Brent fell 4.3 per cent last week.
Current market volatility was caused by oversupply, mostly from high-cost producers, and oil stockpiles are above the five- year average, Mr El-Badri said. Energy industry investment in exploration and production fell 20 per cent, or by about US$130 billion from 2014 to 2015, he said.