OPEC will regain ground and exceed its historic record production levels by 2030 as U.S. shale oil growth flattens out in the coming years, energy company BP said on Tuesday.
In the near term, demand for oil from the Organization of the Petroleum Exporting Countries (OPEC) is likely to remain under pressure as U.S. shale oil production remains strong, BP said in its annual benchmark Energy Outlook 2035.
Production of tight or shale oil in the United States has been the main driver in supply growth that prompted the near halving of oil prices since July as OPEC opted not to cut its own production.
“The current weakness in the oil market, which stems in large part from strong growth in tight oil production in the U.S., is likely to take several years to work through,” BP said.
“But further out, the growth in tight oil is likely to slow and Middle East production will gain ground once more.”
After reaching its highest annual production growth of 1.5 million barrels per day (bpd) in 2014, U.S. shale output is expected to rise by about 3 million bpd between 2013 and 2035, BP said.
While OPEC’s response to the reduced demand for its oil remains a key uncertainty, slower U.S. shale output and higher global demand will lead to an increase in demand for OPEC oil, which is expected to exceed its historic 2007 high of 32 million bpd by 2030.
OPEC’s market share by 2035 is set to reach 40 percent, similar to its average over the past 20 years.
“OPEC remains a central force in the oil market for the next 20 years,” BP chief economist Spencer Dale said.
Global oil and liquids supplies are expected to expand by 20 million bpd by 2035, with North American production forecast to lead global supply growth until 2020, rising by 9 million bpd by 2035.
Middle East production will expand after that, increasing by 5 million bpd over that period, BP said.
CHINA TAKES LEAD
In its report, BP also cut its 2035 oil demand growth forecast to 37 percent from last year’s 41 percent, projecting a slowdown in the expansion rate of developing Asian economies such as China and India from 7 percent since 2000 to 2.5 percent between 2013 and 2035.
Global demand for oil and other liquids such as biodiesel is projected to rise by around 19 million bpd to reach 111 million bpd in 2035, BP said.
China remains the largest contributor to world demand growth and will replace the United States as the world’s top oil consumer by 2035.
At the same time, increased U.S. oil production and lower demand for energy will lead the United States to become self-sufficient by the 2030s, BP said.