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“Oil demand to fall by 400,000 bpd in 2020”

Oslo - The OPEC+ countries will not be able to increase their collective oil production levels in the second half of 2019 without having a detrimental effect on oil prices, writes Norway’s research firm Rystad Energy in its last report

Oslo - The OPEC+ countries will not be able to increase their collective oil production levels in the second half of 2019 without having a detrimental effect on oil prices, writes Norway’s research firm Rystad Energy in its last report.

Rystad Energy’s supply-demand forecast suggests that the so-called call on OPEC production will decline by 1.5 million bpd to 29.0 million bpd from the second quarter to the fourth quarter of 2019.

The Organization of the Petroleum Exporting Countries (OPEC) plus Russia and several other supportive producers, known as OPEC+, account for nearly 49 million of the 84 million bpd of global crude and condensate production expected to be produced on average in 2019.

“Undoubtedly, OPEC+ policies are very important for global oil supply. However, what matters now is the extent to which production will grow from countries outside the OPEC+ alliance relative to demand growth. We expect non-OPEC+ production to grow by 1.9 million bpd year-on-year in 2019, driven by the continued rise of the US shale industry, whereas global demand is expected to grow only by between 1.1 million and 1.2 million bpd year-on-year,” Tonhaugen remarked.

Rystad Energy’s analysis suggests that if the US and China proceed with another round of tariff hikes, covering all their respective trade volumes, global oil demand growth could fall by 100,000 bpd in 2019 and 400,000 bpd in 2020. This is the direct result of lower trade volumes for the US and China, as well as for China’s main Asian trade partners such as Japan, South Korea and the EU. “The downside may be even greater if the global economy, especially the Chinese economy, continues to slow. With this in mind, we believe the market is currently bracing for a greater impact than what current tariffs will deliver,” Tonhaugen remarked.

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