Press

OPEC Must Extend Production Cuts to Balance Market


The medium-term future of the oil & gas industry rests with OPEC's impending decision to potentially extend production restrictions beyond the end of March 2018. Westwood predicts a nine-month extension would lead to a supply-demand equilibrium in 2018, avoiding a return to a significant supply glut. With no such extension currently agreed, Westwood's base case is an oversupplied market comparable with that of 2015.

World Drilling & Production Market Forecast

2015-2019 supply-demand balance: base case vs extended OPEC cut
Source – Sectors

Sectors subscriberslog in here to view the latest report in full.

Not a subscriber?– Contact Gareth Hector to view the report today.

Key Conclusions

  • OPEC has cut deeper than its initial agreement despite low compliance from Iraq and non-OPEC participants.
  • The glut of stored oil is still present and stockpiles will remain above their five-year average by the end of 2017.
  • With OPEC production cuts ending in March, global oil production is predicted to rise 3.1 mmbbl/d in 2018
  • Without additional OPEC intervention, Westwood's base case is a significant oversupply of 1.3 mmbbl/d, potentially sustained over the rest of the decade by further gains from the US and additions in the Middle East.
  • US onshore drilling activity to rise 39% in 2017 and grow at an 11% CAGR to 2023 (base case).
  • Offshore drilling for 2017-2023 down 13% on 2010-2017 due to the decline of project sanctioning over the last two years.

For more information on the latest World Drilling & Production Market Forecast please contact Gareth Hector or Matt Cook (Senior Analyst) for more details or for a live demonstration of the Sectors D&Pdata module.


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