In a research note BofAML concluded that now impact more or less low prices on the volume of demand for oil decreased. According to analysts of the Bank, at an average price of $50 per barrel for the next 15 years the demand for oil during this period will increase by 11.8 million barrels. per day and at an average price of $65 by 10.2 million barrels. a day. Thus, the difference in $15 gives demand growth of 1.7 million barrels. a day on the horizon in 15 years, and is just 110 thousand barrels. per day for the year. This means that OPEC no sense to significantly increase oil production, considered at BofAML.
OPEC countries in the last two years significantly increased its production and increased its share in the world oil market from 33% to 35%. Against the background of increased production in the OPEC countries and lower oil prices declined sharply oil production in the US — in particular, in may 2016 the number of working rigs, according to estimates by Baker Hughes, fell to a record low of 404 pieces.
However, two years of a price war, as BofAML notes, put OPEC in a difficult position — the budgets of the oil corporations of the core countries of the cartel from 2014 to 2016 was reduced by 23%. This, in turn, led to lower investment in developing new fields. As BofAML forecasts, in the coming years the global oil supply from the countries of cartel and other exporters fall sharply. According to analysts of the investment Bank, OPEC will be more profitable not to increase investment to increase production levels.
Saudi Arabia, which, according to the latest IEA is a world leader in oil production, increasing production will not bring tangible benefits, says the American investment Bank. According to estimates of the Bank, with an average production of 12 million barrels. a day for 15 years and the cost of a barrel $65 revenue of Riyadh will reach $4.3 trillion, and at an oil price of $50 and the output of 18 million barrels. per day — $4.9 trillion. However, the cost of production of one barrel at $10-20 increase in production, according to the Bank, will not make economic sense.
The BofAML report was published on the eve of the International energy forum in Algeria, which started on Monday, September 26. On the sidelines of the forum talks of OPEC and oil exporters outside the cartel, the interruption of oil production level. As told a source in the Ministry of energy, meeting all major oil producers will be held on September 28 if September 26 the members of the cartel will come to an internal compromise on the issue of freezing. However, the probability that between OPEC members do not agree — Saudi Arabia and Iran are still unable to come to an agreement, he said.
Riyadh offers to Tehran freeze production at 3.6 million barrels. a day, while Iran wants to increase production to 4.5 million barrels. a day to restore their “pre-sanctions” market share at 13.6%. Other members of OPEC (except Iran, Libya and Nigeria), Saudi Arabia proposes to cut production by up to 4%. The Reuters source in “Rosneft” called the agreement on freezing at this stage the “impossible”: “no One trusts anyone, all only increasing production, both in OPEC and outside it,” — said the Agency interlocutor.
The price of oil in the opening day of the energy forum in Algeria grew: WTI has risen in price from $44,51 up to $of 45.12 (15:20 GMT), Brent — c $of 45.79 to $of 46.66.