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Short-term oil supply remains flat as low oil prices persist

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Report summary

Global liquids production is expected to remain flat in 2016, at 96.1 million b/d. Underlying this, we forecast a decline in non-OPEC supply (including unconventionals and processing gains) of 0.6 million b/d in 2016, driven by declines in US tight oil, Asia and the North Sea. This substantial slowdown is key to rebalancing the oil market in 2016 as OPEC shows no real sign of cutting back its production; although the rate of OPEC growth this year is far slower than in 2015. OPEC crude production is forecast to grow in 2016 by 0.4 million b/d, including Indonesia, which re-joined OPEC effective 1 January 2016. This moderate gain is driven by the lifting of Iran sanctions and subsequent production returning to the market, alongside Saudi Arabia maintaining output above 10 million b/d.

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    Short-term oil supply remains flat as low oil prices persist

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Table of contents

  • Sanctions are lifted on Iran
  • US tight oil production has shown resilience but is vulnerable to renewed budget cuts
  • Upstream investment will fall again in 2016; cost cutting will intensify
  • OPEC will continue to maintain production
  • Pre-FID Deferrals
    • Maintenance on the back burner
    • Russia liquids production to remain stable in 2016
    • Major conflicts continue to affect production
    • Libya peace talks make progress but no near-term recovery
    • Clamp down on theft but production stagnates in Nigeria
    • Petrobras makes downward revision to 2016 Brazil outlook
    • Argentina advances in tight oil
    • Exploration budgets cut further; liquids volumes discovered in decline

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  • Key country supply risks in 2016

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