Extended OPEC Cuts Insufficient to Prevent 2018 Oversupply
OPEC has overdelivered in on its share of the coordinated production cut agreed late last year. However, rising output from exempted members Libya and Nigeria, a recovering US tight oil sector and low compliance of non-OPEC deal participants threatens to undo this work.
2017-2018 liquid production change by geography
Source: Sectors Production Data
- OECD commercial crude stockpiles still stand more than 200 million barrels over the five-year average (OPEC MOMR). 2017’s supply-demand deficit of 0.6 mmbbl/d is insufficient to erode this significantly.
- OPEC market intervention and falling drilling costs has boosted investor confidence in US shale plays, leading to a 66% increase in North America onshore wells drilled in 2017.
- 1 mmbbl/d of OPEC and 0.4 mmbbl/d of non-OPEC supply additions to push the market into a 0.7 mmbbl/d oversupply in 2018.
- Libya and Nigeria to add 0.6 mmbbl/d in 2018 as production is restored from shut-in fields.
- Undersupplied market by the early 2020s due to a lack of project sanctioning over the last two years.
- OPEC could increase market share in the long-term without compromising market equilibrium.
Based on detailed models, the report examines each of the 67 covered countries in turn and includes a summary of hydrocarbon potential and sensitised production outlook, with associated development drilling requirements segmented into oil & gas for the onshore sector and shallow vs. deep water depths for the offshore sector. Country-by-country exploration and appraisal (E&A) drilling forecasts for both the onshore and offshore sectors are also detailed.