In its annual World Oil Outlook report, the cartel of 14 oil-exporting countries acknowledges that restoring balance to the global market is ‘likely to be a long-term challenge’.
OPEC predicts the that American shale output will peak after 2025, at which point demand for crude oil would start rising again.
The cartel also expects a bigger than expected boom in sales of battery-powered vehicles (BPVs) could cause global oil demand to peak and flatten out in the late 2030s.
The OPEC report states gloomily: “In just a few years, BPVs have gone from being completely unaffordable, impractical and not particularly nice to representing a valid option for a niche pool of customers.”
Due mainly to US shale, there has been an abundance of oil. This has pressured prices lower. In fact, they have collapsed by more than 50% from the $110-barrel peaks of early 2014.
Reacting to the weaker prices, OPEC and other oil producing countries such as Russia agreed to cut production until the end of March 2018.
This move injected a bit of life into oil, which bounced back from its lows of $26 per barrel. Throughout 2017 it has traded between $42 per barrel and this year’s high (so far) has peaked at $57.59 per barrel.
9 Nov 2017