With the announced OPEC cut of 1.2 million bbl/d yesterday, Rystad Energy expects that global liquid production to remain at current levels into next year. At the same time, demand is expected to grow by around 1.3 million bbl/d. This means that the large amount of stored oil will decline considerably in 2017.
“This will be the second year in a row in which global oil production fails to grow”, says Espen Erlingsen, Vice President Analysis at Rystad Energy. “Shale is the least vulnerable, while offshore continues to be the victim since OPEC's decision in November 2014,” he suggests.
Rystad Energy's analysis shows that shale production is expected to grow significantly from 2018, with a yearly addition of 1 million bbl/d, whilst offshore will see a production decline from 2018.
“Whilst shale has proven to be resilient with only marginal reduction in produced volumes, only 1.3 billon bbl of new offshore oil volumes are sanctioned in 2016, compared to a yearly average around 10 billion bbl in the period 2010-2013,” Espen Erlingsen comments.
Both shale and OPEC production will play an important role in making sure that enough oil will flow to the market over the next year. Offshore sanctioning activity is at its lowest since the 70's, and the effect of this will become increasingly visible, with a long term decline in the non-OPEC non-shale production expected.
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