Opec sees oil supply surge from rivals, countering cuts

london — Opec raised its forecast for oil supply from non-member countries in 2018 as higher prices encourage US shale drillers to pump more, offsetting an Opec-led deal to clear a supply glut and a collapse in Venezuelan production.

In a monthly report on Wednesday, the Organization of the Petroleum Exporting Countries said non-Opec producers would boost supply by 1.66 million barrels per day this year. That was the fourth consecutive rise from 870,000 bpd forecast in November.

“For 2018, higher growth is expected on the back of the projected increase in US shale production following a better price environment not only for shale producers, but also for other countries such as Canada, the UK, Brazil and China,” Opec said of the outlook for nonOpec supply.

This would lead to “a higher quarterly distribution throughout the year with a record-high level projected for the fourth quarter”, Opec said.

Opec, Russia and several other non-Opec producers, but not the US, began to cut supply in January 2017 to get rid of a global glut of crude that had built up since 2014. They have extended the pact until the end of 2018.

The deal has helped boost oil prices, but it has also encouraged a flood of shale, fuelling a debate about the effectiveness of keeping the curbs in place.

Opec’s forecast of higher nonOpec supply was balanced by figures in the report showing Opec’s compliance with the supply cuts remained high in February and a further sharp slide in Venezuelan oil output. —