OPEC oil re­port ex­pects steady rise in prices

7 Days in Dubai - - BUSINESS - Ma­hak@7days.ae

The av­er­age price of a bar­rel of oil is ex­pected to stand just above $65 in 2021 as com­pared to $45 to­day, ac­cord­ing to OPEC’s World Oil Out­look 2016.

The re­port was un­veiled on the sec­ond day of the Abu Dhabi In­ter­na­tional Pe­tro­leum Ex­hi­bi­tion and Con­fer­ence (ADIPEC) yes­ter­day.

It came af­ter in­dus­try lead­ers ex­pressed op­ti­mism about re­cov­ery on Mon­day. Record-low oil prices have hit the fi­nances of oil-de­vel­op­ing coun­tries hard.

OPEC Sec­re­tary-Gen­eral Mo­hammed Sanusi Barkindo said oil pro­duc­ers had hit the “bot­tom” and sur­vived, but warned they had to stop cut­ting and in­vest in re­search and ex­plo­ration again.

The OPEC re­port said prices would not hit $92 per bar­rel un­til 2040 – still lower than mid-2014 when they were $100-plus.

Barkindo said: “The lower oil price envi- ron­ment is ex­pected to see over­all nonOPEC sup­ply de­cline be­tween 2016 and 2017, be­fore slowly ris­ing again by 2021.”

The re­port also fo­cused on oil con­sump­tion. De­vel­op­ing coun­tries will lead the de­mand in the long term, in­creas­ing close to 25 mil­lion bar­rels per day to reach over 66 mil­lion bar­rels per day by 2040.

Barkindo said: “Avi­a­tion de­mand growth is ex­pected in ev­ery re­gion, par- tic­u­larly in China and In­dia, as the grow­ing mid­dle class push de­mand for avi­a­tion ser­vices.”

Oil an­a­lyst Robin Mills, CEO at Dubaibased Qa­mar En­ergy, said he did not be­lieve oil prices would hit $90 per bar­rel in even 25 years’ time.

He said: “Reach­ing $65 per bar­rel by 2021 is not un­rea­son­able, I do not see it go­ing much higher in the short term.

“But reach­ing around $90 per bar­rel by 2040, that I do not see hap­pen­ing.

“I don’t think the mar­ket will pick up at that rate, it will take much longer, more years to ac­tu­ally reach the $90-100 mark.

“The cost of pro­duc­tion is go­ing down, so I don’t see that hike hap­pen­ing by 2040. With sup­ply, I be­lieve non-OPEC sup­ply de­cline may only last for short pe­riod.

“I do not ex­pect it to be long term.”

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