Demand for oil is to increase by two million barrels per day (bpd) by the end of 2017, Secretary General of Organisation of Petroleum Exporting Countries (OPEC), Mr. Mohammed Barkindo has said
Barkindo stated this while delivering an address at the Oxford Energy Seminar, Oxford University, London .
“Another optimistic indicator going forward is global oil demand growth. It is estimated to increase by close to 2 million barrels a day from the first to the second half of this year. Undoubtedly this boost in demand will contribute to further reductions in commercial oil inventories,” he said.
Recall that countries including France, China, India and Britain have disclosed plans to phase out petrol and diesel cars, which raised fears about the future of crude oil.
Petrol and diesel driven cars will be replaced by electric vehicles, which are said to have zero emissions.
Barkindo said the drop in global oil prices was the sharpest ever experienced, adding that the magnitude of the price drop in the current cycle is the highest of all cycles in real terms.
“In addition, the recent drop in oil prices has been considerably sharper than the decline in prices for other commodities – which is in stark contrast to, for example, the oil price collapse of 1985-1986 when all commodity prices saw a steep decline.
“In terms of the current price cycle, the OPEC reference basket price fell by an extraordinary 80 percent between June 2014 and January 2016.”
According to him, about one trillion dollars in investments were frozen and many thousands of jobs lost, stating that the development also choked off investments, with exploration and production spending falling by a massive 27 percent in both 2015 and 2016.
On the oil production cut agreed by OPEC members, he said all nations need to work together to avoid a supply crunch, adding that energy and environmental issues “are of common concern and, as such, cannot be pursued in isolation”.
Nigeria and Libya are the only countries exempted from oil production cuts because both countries are experiencing instability in their oil sectors. The current oil production cut will lapse in March 2018.
But, the Minister of State for Petroleum Resources, Mr. Emmanuel Kachikwu, is optimistic that Nigeria will again get exempted from production cuts agreed OPEC.
Nigeria was first exempted for six months and the second time, for nine months, in OPEC’s decision to cut crude production to reduce supply glut and increase oil prices.
“So, the question is when do we join but I will recognise stability if I can consistently say that for at least six months, I have seen average daily productions that are within the umbrella of 1.8 million barrels,” he said.