The production of crude oil and related liquids of Vienna-based OPEC is projected to decline to 32.8million barrels per day (BPD) by 2025, according to the group’s 2019 World Oil Outlook (WOO) published recently.
The group has cut its medium-term and long-term oil demand forecasts, as seen in their annual report. With rising climate activism in the West and alternative fuels gaining popularity, the strength of the long-term oil demand has recently been under more scrutiny.
OPEC (Organization of the Petroleum Exporting Countries) has a pact with Russia and other members but has pushed for diminishing supply in the last few years to support the market and prevent a glut. This has resulted in higher oil prices and bolstering of non-OPEC output. OPEC is also expected to contain output in 2020.
OPEC Secretary General Mohammad Barkindo wrote in the foreword of the WOO (World Oil Outlook) report that non-OPEC supply prospects had been revised as U.S.’s shale, in particular, had outperformed expectations.
The oil output of the United States was at record highs, which was attributed to a shale revolution, the combination of hydraulic fracturing (fracking) and horizontal drilling that helped to tap reserves previously deemed uneconomic.
By 2025, U.S. shale-oil output will climb over 40% to reach 17 million BPD, or 3.1 million a day more than what OPEC projected in the 2018 report. American oil has been projected to account for a fifth of global daily output at that time. The supply of U.S. tight oil is projected to reach 16.9 million BPD in 2024 from 12.0 million BPD in 2019. At the same time, OPEC expects the expansion to slow and peak at 17.4 million BPD in 2029.
OPEC cut its forecast for global oil demand over the medium-term. The oil consumption is expected to reach 103.9 million BPD in 2023, which is down from 104.5 million BPD in the 2018 report. The oil demand in the longer-term is expected to increase by 12 million BPD to reach 110.6 million BPD by 2040, which is also lower than the 2018 report. While the producer group did lower demand forecasts, it said the reduction reflected a weaker economic backdrop rather than a shift away from carbon.