The Secretary-General of the Organisation of the Petroleum Exporting Countries (OPEC), Mr. Abdalla El-Badri, said at the Annual Oil & Money Conference in London, that the decline in global crude oil prices may not abate until 2017, as the market is expected to rebalance within two years. This means countries like Nigeria whose economies are suffering the effect of the slump in global oil prices will have to wait two more years for their economies to stabilize.
Badri, however, predicted that oil prices would not remain at the current six-year lows of below $50 per barrel but will rise in the next few months.
“We have an overhang of 200 million barrels in the market. All of us should work together, OPEC and non-OPEC, all of us have to work together to see how we can get rid of this 200 million barrel overhang,” Badri said.
“I am really disturbed,” he said, referring to the wave of investment cuts announced by oil companies this year in response to the price plunge. “You will see the result. This means less supply and higher prices in the future.”
He explained that overall global investment in oil could drop by $130 billion this year from $650 billion in 2014. He noted that non-OPEC supply growth was slowing and was expected to be zero next year, while the call on OPEC crude was rising.
The OPEC Secretary General also said he expected Iran’s full return to the market to be discussed at OPECs next meeting on December 4, in Vienna, Austria. Iran has said it expects to boost its crude exports by one million barrels per day within six months of the lifting of sanctions.
OPEC expects global demand for its crude, under pressure in recent years because of rising supplies from outside the group, to rise to 30.3 million barrels per day in 2016, about one million bpd more than in 2015.
“We will see the effect of the cut on production. This will mean less supply in the near future. We are now seeing a low price. After a few months, we will not see this. We will see a higher price again,” Badri added.