Setting the Stage for a Clash Between OPEC and Non-OPEC Producers in 2018

SEATTLE (Oil Monster): Amidst OPEC members’ decision to commit to restrain oil production, certain non-OPEC member nations have already hinted at boosted outputs in 2018, thus setting the stage for a clash between them. This must essentially result in balanced market conditions, industry experts noted.

The International Energy Agency (IEA) forecasts a slight reduction in global oil demand growth from 1.5 million barrels per day (bpd) in 2017 to 1.3 million bpd in 2018. The OPEC countries which held on to their production cut targets in 2017, is expected to do so in the next year also. Based on forecasts, OPEC crude output is expected to remain slightly higher at 33.2 million bpd in 2018, upon comparison with 2017. However, non-OPEC supply is expected to rise by 1.6 million bpd in 2018, thereby resulting in a closely balanced market. Further reduction in excess global inventories may lead to a balanced market during late 2018.

As per estimates, the non-OPEC crude supply is expected to touch 59.6 million bpd in 2018. The continued recovery in US shale oil production will contribute to incremental supply. The rise in oil investments and the notable jump in well efficiency are likely to enhance the output during next year. The US oil output is projected to increase by 0.18 million bpd to 1.05 million bpd. Production boosts from other countries including Brazil, Canada, the UK and Kazakhstan may also lead to increases supply.

Meantime, crude oil prices edged higher on disruptions caused by North Sea pipeline outage and the indefinite industrial action declared by a major oil union in Nigeria.