Dec. 4–Global oil output from non-OPEC nations is expected to grow by record levels in 2020 and help trigger a crude glut and lower oil prices, according to a new report from the Norwegian research firm Rystad Energy.
The world is expected to add about 2.25 million barrels of oil per day — outside of OPEC — which is more than double the anticipated demand growth projected for 2020, Rystad said. This would surpass the 1978 record of just less than 2 million non-OPEC barrels added.
The U.S. shale market, Norway, Brazil, Canada and Guyana are all going to add significant volumes of crude projection in 2020 even as the Organization of the Petroleum Exporting Countries is expected to maintain production quotas next year.
“The record-high production growth from non-OPEC tight oil (shale) and offshore puts significant pressure on OPEC’s ability to balance the oil market in 2020,” said Espen Erlingsen, Rystad’s head of upstream research. “OPEC will need to extend and deepen production cuts if they have any hope of supporting the oil price in the near-term.”
The concern is that OPEC and its allies, including Russia, simply holding onto the status quo could inadvertently cause oil prices to fall to about $40 per barrel by mid-2020.
Rystad projects the United States to add another 1 million barrels per day in 2020 led by onshore shale growth. Even if that prediction falls short as U.S. shale growth slows, other countries could still cause the world to surpass the 1978 record.
Norway and Brazil will each add close to 500,000 barrels of oil production per day from offshore fields, while Canadian shale and oil sands will bring on about 250,000 barrels. Exxon Mobil will tack on another 100,000 barrels a day or so offshore of Guyana as the tiny South American nation becomes a relevant energy player.
Other smaller increases should come from Australia, Yemen, India, South Sudan and Malaysia, Rystad said.
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