Insight
Global oil supply long-term outlook H1 2020
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Report summary
The low oil price, associated with the coronavirus-related collapse in oil demand, has had an immediate impact on upstream activity: production has been cut, investment levels scaled back massively, and projects deferred. The upshot is a substantial downgrade to global supply in the near and medium term, reaching 4.0 million b/d in 2023. Non-OPEC supply reaches a plateau of 66 million b/d in the early 2030s – but the peak is around 1 million b/d lower. The largest downgrades are focused on North America. Onshore US Lower 48 crude and condensate production returns to growth from 2022 and peaks at 12.2 million b/d in 2030 – but stricter use of capital, even as prices increase, results in downward revisions averaging 1.7 million b/d between 2020 and 2025. OPEC crude oil capacity remains stable at close to 34.5 million b/d until the mid-2020s, after which steady growth lifts overall capacity to 38.7 million b/d in 2040. Heightened geopolitical risk adds uncertainty to the view.
Table of contents
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Non-OPEC supply: deferred near term production results in substantial downgrades
- North America: remains the key growth area for non-OPEC supply, but suffers largest downward revisions
- US Lower 48: price crash consolidates growth in Permian
- Capital discipline: growth at higher prices?
- Permian operators are best positioned for growth
- Canada: steady growth driven by the oil sands and rising output of condensate/NGL
- Russia and Caspian: near-term downgrades due to OPEC+ deal; long-term potential upgraded
- Non-OPEC growth areas: Brazil, Norway and Guyana key outside of North America
- Emerging producers: further deferral of production, but Suriname upgraded
- Mature producers: mitigating decline following price crash and investment cuts will be challenging
- Key non-OPEC trends post-2030
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OPEC capacity grows steadily across the forecast period despite downgrades to Iraq and Iran
- Iraq capacity growth slows due to lower investment, risks from civil unrest and an increase in militant activity
- Timing for the end of Iran sanctions pushed out to 2025 causing capacity increases to be revised lower
- Faster pace of growth for UAE capacity as recent investment surge bears fruit
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