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Rystad Energy on Monday projected that global oil supply growth would slow in 2024 and potentially the following year, due to the extension of OPEC+ voluntary cuts and the cartel’s demand forecast.
Based on the most recent OPEC+ guidance, total global oil supply growth will be near zero in 2024, which could render this year the first since 2020 with zero supply growth, Rystad said, estimating expect supply growth at around 80,000 barrels per day for 2024, down from earlier expectations of 900,000 bpd, which had been made in early June Reuters reported on Monday.
Rystad noted that OPEC+ cuts will take 830,000 bpd off the market in 2024 and 1.04 million bpd off the market next year, with U.S. shale being the most “trustworthy source” of supply growth.
“The market initially responded negatively to the latest OPEC+ guidance. However, it’s difficult to remain completely bearish when global oil supply growth is expected to slow down in 2024 and reduced production is still a possibility in 2025,” Reuters quoted Rystad vice-president Patricio Valdivieso as saying.
OPEC’s current strategy aims to keep production at a level that can support oil prices in a range of $80-$100/bbl, which becomes challenging if U.S. production continues to grow, as it has for over a decade and a half.
Last week, OPEC released its monthly oil market report (MOMR), keeping its demand growth forecast for the year unchanged at over 2 million bpd. Simultaneously, the International Energy Agency (IEA) released a new market report with significantly different projections, forecasting a “staggering” supply overhang of 8 million bpd in spare production capacity by 2030. The forecast angered OPEC, which called the prediction “dangerous” and warned it could inject additional volatility into oil markets.
