oil prices were able during the last December to achieve levels not seen in nearly two years after the agreement of «OPEC» and major producers to cut oil production by 1.8 million barrels a day in cooperation with Russia and others to reduce their supply, in a move to restore balance to the markets during 2017.
In the midst of optimism of the recovery of oil markets and talking about the growth of demand on crude , questions have emerged on the issue of supply and demand and the ability of supply to meet the growing global demand for oil, where estimates indicate a disparity between demand and supply up to 600,000 barrels per day, which may occur the case of the deficit within the oil markets.
Organization of Petroleum Exporting Countries “OPEC” expects high demand for OPEC oil states to the level by 33 million barrels a day at a time, which it is expected the success of the agreement of the reduction of production to maintain the production of OPEC members at 32.52 million barrels per day which means that the demand for that oil of the organization will be more than the supply of about 500 thousand barrels per day and that will enhance the growth of prices to appropriate levels for the promotion of investments , as some charge “OPEC” of causing the oversupply will be far from reality in the new year in the light of the growing demand. ”
The International Energy Agency said in its monthly report, published in the last month of December that the global demand on oil will rise in a stronger pace than expected in the years 2016 and 2017, the report added that the planned reduction of the production of these countries could lead to increase the demand over the supply by 600 thousand barrels per day .
The report also said that if OPEC is committed to a plan and without a slowdown to reduce the production to 32.7 million barrels per day, along with the other producers to cut their production by 558 thousand barrels per day, it is likely that the market will move into deficit.
And the International Energy Agency raised , for its part, its forecast for growth in oil demand in 2017 to 1.3 million additional barrels a day with the changing of demand data for oil by China.
According to the agency world oil markets will move to a deficit during the first half of 2017, where it is expected that the size of the demand to exceed the supply at about 600 thousand barrels per day, so if “OPEC” and producers outside the Organization are committed to the historic agreement to cut production, which was concluded recently . The agency added in its latest monthly report on the state of the global oil markets, this assumption is based on the full commitment of “OPEC” to ceiling of the new production at 32.7 million barrels per day, as well as the co-producers commitment from the outside “OPEC” to the reductions agreed upon and identified about 560 thousand barrels per day.
The «Bloomberg» explored the views of 24 oil analysts, and concluded that the average of price expectations will be $ 53 a barrel during the first quarter, and $ 56 during the second quarter, and $ 58 over the full year.
Experts believe that needs of producers to raise energy prices was the main stimulus for the commitment to the Vienna agreement and reduce the supply and the convergence of the gap between supply and demand down to the desired state of balance in the oil market.
Economic reports expect the oil markets to see a slight improvement during the current year and it is expected that the markets to turn into a state of balance during the second half of the year 2017, while the Arab economies could see an improvement in 2017, especially with the improvement in oil prices, especially those rentier states whose budgets are based on the price of a barrel of oil. As well as the improvement in the oil market in the world only by avoiding a recession in the global economy, however expectations remain subject to the commitment of members and non-OPEC to the agreement, it is expected that prices are improving supported by expectations of lower US crude stocks and the commitment of producers to the agreement to cut production, which went into effect earlier this year.
Amer Al-Omran
Translated by : Mudhaffar Kusairi
Rawabet Center for Research and Strategic Studies