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[LONDON] Opec expects the average price of its crude oil to rise to US$80 a barrel by 2020 as supply from non-members grows more slowly than expected.
Production from nations outside the Organization of Petroleum Exporting Countries will be 58.2 million barrels a day in 2017, 1 million lower than previously forecast, according to an internal research report from the group seen by Bloomberg News. While Opec expects little stimulus to demand in the medium term as a result of cheaper oil, it estimated that the average price of its crude will increase by about US$5 annually to 2020 from US$55 this year.
The impact of current low prices is "most apparent on tight oil, which is more price reactive than other liquids sources," according to the report.
"Supply reductions in US and Canada from 2014-2016 are clearly revealed."
The price of oil has tumbled more than 50 per cent in the past year, triggering a cutback in drilling in the US and other non-Opec nations. Crude collapsed as Opec followed Saudi Arabia's strategy of defending its share of the global market against shale and other competitors.