((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
Growth in global oil supply will likely slow this year, Rystad Energy said in a report released Monday, with a strong possibility of a further decline in 2025.
The consultancy cited the recent extension of voluntary cuts by OPEC+, as well as the group’s unchanged demand forecasts to explain the outlook.
Expected total oil supply growth is now closer to 80,000 barrels per day (bpd) for 2024, up from 900,000 bpd earlier this month, Rystad estimates.
CONTEXT
OPEC+ agreed to extend cuts of 3.66 million bpd for one year until the end of 2025 and to extend cuts of 2.2 million bpd for three months until the end of 2025. september.
The group will phase out the cuts by 2.2 million bpd over a one-year period from October to September 2025.
WHY IT IS IMPORTANT
Total global oil supply growth is close to zero for this year with the latest guidance from OPEC+, Rystad said, adding that if this materializes, 2024 will be the first year since the 2020 pandemic without growth in oil supply.
Taking into account all countries that have extended their voluntary cuts, the total amount of oil removed from the global market reaches 830,000 bpd in 2024 and 1.04 million bpd in 2025, according to the report.
“US shale remains a reliable source of growth, although it is less elastic to price changes and more consolidated after continued rounds of mergers and acquisitions. This reduces the near-term upside potential for US growth” , according to the report.
KEY QUOTES
“The market initially reacted negatively to the latest guidance from OPEC+. However, it is difficult to remain completely bearish as global oil supply growth is expected to slow in 2024 and a production cut is still possible in 2025,” said Patricio Valdivieso, vice president and global head of crude trading analysis at Rystad Energy.
MARKET REACTION
Brent oil futures, a global benchmark,
LCOc1 have gained 7.7% since the start of the year, according to LSEG data. West Texas Intermediate CLC1 crude oil futures rose 11.5%.
