NEW DELHI (Reuters) - The Organization of the Petroleum Exporting Countries expects oil demand in 2017 to be as robust as this year, the group’s secretary general told an energy conference on Monday, though recently agreed production cuts could raise prices for buyers.
Mohammed Sanusi Barkindo, briefing reporters on the sidelines of India’s Petrotech energy conference, said Asia would have a big role to play in the demand growth and that there was plenty of room for OPEC and non-OPEC countries to grow in the global oil market.
OPEC last week agreed its first oil output cuts since 2008, looking to reduce production by around 1.2 million barrels per day (bpd) beginning in January to try to reduce global oversupply and prop up prices. It hopes non-OPEC countries will contribute another 600,000 bpd to the cut.
Barkindo said OPEC has invited non-OPEC countries Russia, Colombia, Congo, Egypt, Kazakhstan, Mexico, Oman, Trinidad and Tobago, Turkmenistan, Uzbekistan, Bolivia, Azerbaijan, Bahrain and Brunei to a meeting on Dec. 10 to discuss their contribution.
“We want the inventory level to be at a past 5 year average, not more and not less than that,” he said.
Oil prices have risen since the production agreement, with benchmark Brent crude oil futures soaring on Monday to its highest since July 6, 2015 to $55.20 a barrel. [O/R]
This has worried big buyers like India, which imports more than 80 percent of its crude oil and has benefited from two years of soft prices. Indian Oil Minister Dharmendra Pradhan told the conference oil producing countries “must match security of supply with security of demand” when deciding prices.
“We are expecting growth next year as robust as this year, in the region of around 1.2 million bpd,” Barkindo said. “May be it can go higher, you never know. If it goes higher then producer countries have a right to produce higher in order to meet the demand from countries like India.”
He said oil consumers wanted stability in the market to ensure that future supply was guaranteed. He also said that OPEC members were investing heavily to ensure supplies could meet global oil demand, which is likely to continue to rise steadily.
“Alone in India, oil demand is projected to rise to more than 10 million barrels per day (bpd) by 2040, from 4.1 million barrels per day now,” Barkindo said.
Overall, OPEC estimates that world oil demand will rise by 17 million bpd to around 110 million bpd by 2040.
Reporting by Sudarshan Varadan and Promit Mukherjee; Writing by Krishna N. Das. Editing by Jane Merriman