The Organisation of Petroleum Exporting Countries has said it expects the global oil market to tighten further in the coming months amid renewed geopolitical tensions but kept its 2019 oil demand growth figure steady as the “upside potential for global economic growth in 2019 remains limited.”
In its monthly oil market report, OPEC estimates that demand for its crude will average 30.58 million barrels per day in 2019, a fall of 1.01 million bpd on the year, suggesting that global oil inventories are going to decline sharply from current levels, according to S&P Global Platts.
But the report also showed a surprise rise in crude inventories in the last few months, suggesting that there may still be need for the producer group to continue its output cuts to balance the market.
The group’s 14 members pumped 30.031 million bpd in April, compared with 30.034 million bpd in March, according to OPEC secondary sources.
This is 549,000 bpd lower than the call on its own crude. Demand for OPEC crude in 2018 averaged 31.59 million bpd.
This report comes after key oil infrastructure and transit routes in the Middle East have been hit by attacks of sabotage in the past few days.
Tensions over threats to oil flows from the Middle East escalated Tuesday after an attack halted flows through Saudi Arabia’s main oil transport pipeline to terminals and refineries on the Red Sea.
OPEC also noted that non-OPEC upstream sanctioning activity appears set to reach an all-time high of $26.5bn this year, marking the start of a new cycle of investment.
“The total capital expenditure for non-OPEC’s tight oil – which consists mainly of the US – will be around $124n in 2019,” it said.
OPEC warned that non-OPEC growth in 2019 is likely to be slower than last year amid expected weaker global economic growth and due to costly logistical constraints especially in the US.
“North American producers will continue facing pressure by shareholders demanding capital discipline and a return on their investments, and this could come at the expense of increased disposable capex,” the report added.