OPEC sees strong demand, confirms cuts
VIENNA, February 13, 2017 – An OPEC report released Monday predicts robust growth in oil demand over 2017.
“World oil demand in 2016 continued its healthy performance for the second year, with growth set to be above 1.3 million bopd,” it said. “In 2017, oil demand growth is assumed to remain healthy with potential growth estimated at 1.2 million bopd, well above the 10-year average of 1.0 million bopd.”
The report also largely confirmed the findings of an earlier IEA report saying the cartel was some 90% compliant with last November’s production cut deal and projecting strong growth in demand.
In January 2017, the report said, OPEC crude production was about 890,000 bopd lower than in December. Saudi Arabia, Iraq and the UAE made the deepest cuts, while Nigeria, Libya and Iran, which were exempted from the agreement, actually increased output.
Taking into account reductions by non-OPEC producers including Russia, the total global supply of oil averaged 95.8 million bopd last month, some 1.29 million bopd less than the month before and 460,000 bopd less than January 2016. OPEC’s share of the global oil output declined by half a percent last month and stood at 33.5%.
Kuwait’s oil minister Essam Al Marzouq said the cartel is pushing for non-members who agreed to the deal to increase their share of the cuts. Currently non-OPEC members’ compliance level is at 50%, compared to 92% for members.
Al Marzouq noted that at the time of the deal, there was an understanding that participants would increase cuts gradually. Now however there is an expectation that compliance will go up.
“We understand the circumstances, and in February we are talking to non-OPEC producers to raise their cuts according to their commitments,” said the minister, according to a Bloomberg report.