Production is set to rise in Iran and Iraq, leading to an overall increase globally of 460,000 b/d. However, with global demand growth forecast at 1.2 MMb/d this year, the likely outcome will be a reduction in net over-supply of roughly 0.75 MMb/d.
This should put upward pressure on oil prices, DW says, as the situation develops over the year.
The trend is unlikely to continue into 2017 – while demand will continue to grow this will be offset by higher production. Most of the additional volumes are set to be offshore (net 1.1 MMb/d increase).
The industry has still to readjust to the period of record levels of investment (2011-2014), during which major projects were committed to – lead times for some of those projects are long, DW points out.
But the current hiatus in spending could be followed by problems toward the end of the decade, with potential under-supply of oil by 2020.
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