Crude oil prices are expected to average $66 a barrel in 2019 and $65 a barrel in 2020, a downward revision from the October forecast due to the weaker-than-expected global growth outlook and greater-than-anticipated U.S. production, the World Bank said in its latest report.
U.S. oil production is nonetheless expected to rise by 1.6 mb/d in 2019 according to the IEA’s April 2019 Oil Market Report, a slower pace than 2018 but still robust.
Its possible that major oil-producing countries, notably Saudi Arabia and the United Arab Emirates, could increase production to compensate for any shortfall resulting from the termination of waivers, the bank noted.
OPEC currently has 3.6 mb/d of spare capacity, with Saudi Arabia accounting for approximately one-half of this. However, it is unclear how rapidly these countries will be willing to respond to a reduction in Iranian exports, the report said.
Any change in their production will have implications for the future of the production agreement between OPEC and its partners-the group is due to meet in June to discuss whether to extend the cuts, the World Bank said.
Global consumption of crude oil rose 1.1% year-on-year in the first quarter of 2019, a slight acceleration relative to the previous quarter. China, India, and the United States accounted for most of the increase.
Consumption is expected to rise by 1.2 percent in 2019, somewhat less than expected in the October 2018 report and toward the lower end of industry forecasts, the report said.