Search DubaiPRNetwork.com

Dubai and UAE

Monday, February 22, 2021/ Editor

Home >> Business and Economy

BofA - Global Energy Weekly: Eyes on the Spare Supplies

Home >> Business and Economy

OPEC+'s 9mn b/d of spare capacity stands ready to ramp…


In the wake of the 2Q20 oil demand collapse, OPEC+ struck an unprecedented deal to remove nearly 10mn b/d of supply from the market. Now, with Brent trading into the $60-65 range, we expect OPEC+ to counter, adding more than 1.3mn b/d of supply in 2Qe and ramping further into year-end to keep prices and balances in check. Over the medium term, we think OPEC+ coordination will likely continue as the group wields its spare capacity in an effort to manage prices. GCC countries will likely have to carry meaningful spare capacity as demand growth slows and modest non-OPEC+ increases fill the gap. 


…while US shale takes a back seat over the medium term


During 2021-26, non-OPEC is set to add more than 1.5mn b/d of gross capacity (ex-shale), a rate similar to what was delivered during 2015-20. The difference today is that US E&Ps have shifted their focus away from growth and towards shareholder returns. The result is slower US supply growth, which we think will average less than 400k b/d YoY for crude oil and NGLs during 2021-26. Previously, US output grew more than 1mn b/d YoY during 2015-19. Also, OPEC gross capacity additions look set to shrink dramatically, from 600k b /d in 2015-20 to just 200k b/d in 2021-26, but the group's existing spare capacity serves as a buffer, making up for limited investment.


LatAm is key source of supply growth and Iran remains a ?


Deepwater projects in offshore Guyana and Brazil dominate the medium term horizon. During 2021-26, we expect these two countries to deliver roughly 1.8mn b/d of supply, and neighboring Suriname may see new volumes during 2025-26 as well. These new undertakings are complex and a history of project delays in Brazil's pre-salt suggests that there is some downside risk to these growth expectations. Geopolitics continue to plague OPEC producers, creating uncertainty over the medium term. Iran and Venezuela could see sanctions relief, which could lead to 1.7mn b/d and 500k b/d of incremental supply. Meanwhile, Libyan output could fall back towards zero if tensions flare again. 

 

 

Share


Previous in Business and Economy

Next in Business and Economy


Home >> Business and Economy Section

Latest Press Release

RTA Completes Traffic Upgrades to Improve Connectivity Between Sheikh Zayed Road and Al Khail Road v ...

Dubai Municipality Announces Registration Opening for the Second Edition of the Food Systems Excelle ...

Emirates Aviation University marks 35 years of supporting the local and global aviation ecosystem

Emirates layers on retrofitted aircraft with latest product, including Premium Economy to more citie ...

Music, Maps, and Stories at the Mohammed Bin Rashid Library in July

New SHEGLAM Daydreamer Mini Palette Turns Pocket-Sized into Power Pigment

GEMS Education launches GEMS School Management (GSM) to deliver world-class schools globally; in adv ...

Dubai Airshow 2025 unveils new features as registration opens, promising unmatched experiences on an ...

Passenger Growth Hits 5% in May

João Almeida: Racing for Glory and Riding for the Team

May Air Cargo Demand Up 2.2% Despite Trade Disruptions

Return to Ritual: Celebrate Self-Care Month with BUFARMA Skincare

Dubai Government Human Resources Department organises 2nd Human Resources Forum of 2025 to discuss e ...

Dubai Customs and Dubai Police: A strategic partnership to protect the homeland and to promote stabi ...

Rediscover family shopping days: REDTAG opens its doors in Al Ain

Dubai Culture Launches Open Call for 14th Sikka Art & Design Festival

Summer Restaurant Week Returns This DSS with Over 65 Exclusive Dining Deals Across Dubai

Julien Calloud Appointed CEO of SAVOYE to Lead a New Era of Performance and Innovation

Zoho Powers Up CRM for Everyone Platform with AI to Elevate Customer Experience

Media's Role in the Age of Algorithms By HH Sheikha Latifa bint Mohammed bin Rashid Al Maktoum