Ministers of oil resources in Organisation of the Petroleum Exporting Countries (OPEC), have reeled out expected challenges for the global oil sector in 2018.
The Ministers, in the latest OPEC Bulletin, expect the sector to experience stable crude oil prices, lower stock and lower investment within the first and second quarters of this year.
In an interview published in OPEC Bulletin, the Minister of Energy and Industry, Qatar, Dr Mohammed Bin Saleh Al-Sada, expects the first and second quarters to pose a little challenge, as these periods are marked by low consumption of oil.
He said the third quarter of 2018 would repeat the 2017 story, and the markets are expected to rebalance by the second half of 2018. “We must be patient and wait for the transparent data from forecasting agencies including OPEC,” he said.
The Minister of Energy, Industry and Mineral Resources, Saudi Arabia, Khalid A Al-Falih, anticipates the market to continue to exhibit stock draw downs in 2018, notwithstanding seasonal factors, underpinned by a combination of fairly healthy demand and supply growth constraints.
“As a result, the surplus stocks we still have today should dwindle by the year-end. Beyond 2018, I expect the impact of lower investments, since the downturn began, which is also accelerating the decline in maturing oil fields, to assert itself increasingly more with time leading to a tighter market in the mid-term. So in summary, I believe a confluence of the factors I have highlighted will lead to a stronger market next year.”
The Minister of Oil, and Minister of Electricity and Water, Kuwait, Issam Almarzooq, believes the oil sector will see a more balanced market in 2018.
He said the oil market re-balancing will happen, and “it is just a matter of time, which requires patience and diligent action by the countries participating in the ‘Declaration of Cooperation.”
He added that OPEC is now well underway and on course to reaching a rebalanced oil market, “although we still have some more work to do. Supported by a healthier outlook for oil demand next year fuelled by a bullish economic growth forecast, and with continued discipline amongst oil producing nations, I am confident that we will see more balanced market in 2018.”
The Minister of Oil, Iraq, Jabbar Ali Hussein Al-Luiebi, noted that the United States oil production still needs to be closely monitored, as it still holds the bulk of the effects on the supply side.
He said the cooperation between OPEC and non-OPEC suppliers should continue as a suitable means to take action when needed.
The Minister of Energy of Algeria, Mustapha Guitouni, said the rebalancing of the oil market has already begun since the 24 producers adopted the ‘Declaration of Cooperation’ and will continue to have a responsibility in 2018 to accelerate this rebalancing.
According to Guitouni, the oil market is sensitive to natural decline of oil fields, the production of new oil fields, technological changes and global growth.
All of these factors, he noted, affect the direction the market will take. “However, considering that technological developments can both favour the production of shale oil and improve global oil supply by extending the life of mature fields, they will not have a significant impact in the short-term on global oil supply.
“This means that the main driver of the oil market for 2018 will be global growth. This is based on the assumption that an increase (between 1.4 million barrels per day (bpd) and 1.5mbpd) of production in the United States, and other non-OPEC producers should satisfy the increase (between 1.3mbpd and 1.4mbpd) of world oil demand.
The 24 signatories of the ‘Declaration of Cooperation’ will continue to maintain their adjustments until the end of 2018; and OPEC will neutralise the ‘special conditions’ of Libya and Nigeria, including an increase in the rate of adjustment of production provided for at the 171st Meeting of the Conference on November 30, 2016.
“We could then glimpse a resumption of the global stock overhang and reach the historical average of the last five years prior to 2014 towards the end of the second quarter of 2018. This situation will have a positive impact on prices, which will then fluctuate between $60 per barrel and $65 per barrel.”
Nigeria’s Minister of State, Petroleum Resource, Dr. Ibe Kachikwu stated: “I think the whole idea of getting both OPEC and non-OPEC countries together was a fantastic idea. We all pushed for it, and the sheer momentum that has gathered and what it has done for the industry has been unbelievable.
More importantly, it’s helped forge unity, even among OPEC Members. All in all, it’s been good. I think the Secretariat has done an excellent job, while taking on an additional workload.
“I didn’t think we would get this sort of momentum and unity between OPEC and non-OPEC countries that easily. But I always felt cooperation was a solution. I always advocated for it. The more universality we can bring to this relationship, the more stability we bring to the market — so I am happy with what we have achieved so far.