Opec+ faces 'major challenge' from competitors' surging output
More crude oil production set to come from United States, Brazil, Norway and Guyana
The Organization of the Petroleum Exporting Countries and its allies face stiffening competition in 2020, the International Energy Agency said on Friday, adding urgency to the oil producer group's policy meeting next month.
"The Opec+ countries face a major challenge in 2020 as demand for their crude is expected to fall sharply," the Paris-based agency said in a monthly report.
The IEA estimated non-Opec supply growth would surge to 2.3 million bpd next year compared to 1.8 million bpd in 2019, citing production from the United States, Brazil, Norway and Guyana.
"The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to Opec+ ministers gathering in Vienna at the start of next month," it added.
While US supply rose by 145,000 bpd in October, the IEA said, a slowdown in activity that started earlier this year looks set to continue as companies prioritise capital discipline.
Demand for crude oil from Opec in 2020 will be 28.9 million bpd, the IEA forecast, one million bpd below the exporter club's current production.
It was the IEA's last monthly report before the December 5-6 talks among Opec states and partners led by Russia on whether to maintain supply curbs aimed at buoying prices and balancing the market.
The agency kept its assessments for growth in global oil demand in 2019 and 2020 at one million bpd and 1.2 million bpd respectively, but said its outlook might slightly underestimate the impact of tariffs from the US-China trade war.
"With plans underway for the Aramco IPO and the persistent need for revenues to fund the government budget, Riyadh has every incentive to keep oil prices supported," the IEA said.
The IEA said that if some or all tariffs were lifted in coming months, "world economic growth and oil demand growth would both rise significantly", though the rebound may not be immediate.
Sluggish refinery activity in the first three quarters has caused crude oil demand to fall in 2019 for the first time since 2009, the IEA said, but refining is set to rebound sharply in the fourth quarter and in 2020.
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