NEW DELHI:Even as the world, and major oil consumers like India and China, await the results of a key meeting between oil producers set to take place this month, the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday observed that there is ‘considerable uncertainty’ as to which direction the oil market will take.
One of the primary reasons for the steady upward march of crude oil rates over the last year had been a deal between major oil producers led by OPEC and Russia to cut production in order to bring oil prices up. However, next week’s meeting in Vienna, Austria, between OPEC and its partners will see them decide on whether to extend the production cut or not.
Brent crude oil prices have already fallen from the $80 per barrel mark to around $76 per barrel currently, after Saudi Arabia and Russia indicated that they would increase production to offset any losses arising from US sanctions on Iran and supply disruptions in Venezuela.
However, OPEC included other reasons for the uncertainty in the global oil market. Question marks remain over global economic growth and the lack of clarity of US production capacity is making forecasting difficult, OPEC said in its monthly report. “... considerable uncertainty as to world oil demand and non-OPEC supply prevails,” the report noted, “Global economic activity has slowed in 1Q18, with growth below expectations in the major OECD economies.”
While global growth forecasts for 2018 remains at 3.8 per cent and a pick up is expected in the second half of the year led by the US, China is expected to continue financial tightening.“... combined with monetary measures in the US, could dampen growth in 2H18. India is also forecast to show lower growth in the second half of the year, after a strong recovery during 1H18,” OPEC said.
Demand for OPECcrude oil
33.1 million barrels per day in 2017
32.7 million barrels per day in 2018