The global crude-oil market will return to balance in the second half of this year from an oversupply of 2million barrels a day that has caused prices to plummet, Opec Secretary-General Abdalla El-Badri has said.
Speaking at a conference in Manama, Bahrain, Mr El-Badri said demand in 2014 was weaker than expected “at just below 1million barrels a day” and will rise by 1.2million barrels a day this year.
Crude has lost half its value since June as US producers pumped oil at the fastest pace since 1983.
Prices collapsed after Opec’s decision on November 27 to maintain production rather than sacrifice market share in the face of a glut.
Non-Opec supply has grown by 6million barrels a day since 2008 while production by members of the Organisation of Petroleum Exporting Countries has remained at about 30million barrels, Mr El-Badri said.
Opec pumped 30.6million barrels a day in February, an increase of 163,000 a day that was led by gains from Saudi Arabia, the world’s biggest crude-oil exporter.
It was the ninth straight month that the 12-member group has produced more than its collective target of 30million barrels, data shows.
Opec can’t cut production because of the rise in shale and non-Opec output, Mr El-Badri said.
He urged Opec nations to continue investments and diversify their economies, many of which rely mostly on oil revenue.
“If we made a cut in the November meeting, then we would have needed to make another cut in January, and then we would need another cut in June as supply will keep increasing from non-Opec,” he said.
Kuwait is in a “critical situation” because crude oil accounts for 94% of the Persian Gulf nation’s gross domestic product, Oil Minister Ali al-Omair said at the conference.
Over the next 25 years, the oil industry will need to invest £6.6trillion to meet a forecasted 60% increase in energy demand, Mr El-Badri said.
“The world will need huge investments in oil to meet growth in demand by 2040 and our projections show that we will need around $10trillion between now and 2040,” he said, adding: “Energy demand will keep growing and it will increase by 60% between now and 2040, and fossil fuel will remain central to the energy mix.”
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