The region’s oil major producers could be facing lower crude prices due to the growing spare capacity of the Opec producing states, as non-Opec supply continues to increase.
Speaking at MEED’s Kuwait Energy and Efficiency 2013 conference being held in Kuwait, Michael Sarna, vice-president for the downstream energy consulting unit of IHS Purvin & Gertz, said that whenever Opec spare capacity increases, the oil price decreases.
“In 2003-04, Opec’s spare capacity was just over 1 million barrels a day (b/d) and this played a massive part in driving prices up,” he said. “Spare capacity for Opec, which is the world’s major swing producer, is expected to hit 4.4 million b/d and this will put a lot of pressure on prices.”
Brent crude oil averaged more than $111 a barrel in 2012, but that is expected to fall to about $105 a barrel during 2013 and $90-$95 a barrel by 2014.
Daily non-Opec capacity is rising by about 1 million barrels a year and this is putting pressure on Opec.
The region’s major oil producers have said that they are happy with $100 a barrel, despite the impact of lower oil prices on government revenues. Most government budgets for 2013 in the region are based on a break-even oil price of between $60-$95 a barrel, with three exceptions – Algeria ($114), Bahrain ($119) and Iran ($150).