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OPEC, allies could face tough competition in 2020–IEA

OPEC, allies could face tough competition in 2020–IEA

Mubasher: The Organization of the Petroleum Exporting Countries (OPEC) and allied producers would be in the face of fierce competition next year, according to the International Energy Agency (IEA).

The so-called OPEC+ alliance would “face a major challenge in 2020 as demand for their crude is expected to fall sharply,” the Paris-based agency said in a monthly report.

Demand for OPEC crude next year will be 28.9 million barrels per day (bpd), the IEA predicted, 1 million bpd lower than the group’s production levels.

On Thursday, OPEC expected that demand for its output would average 29.58 million bpd, 1.12 million bpd less than this year.

“Surging non-OPEC supply explains this drop, with growth of 2.3 million bpd next year versus 1.8 million bpd in 2019,” the energy watchdog, citing output from the US, Brazil, Norway and Guyana.

The IEA maintained its forecasts for growth in global oil demand this year and next at 1 million bpd and 1.2 million bpd, respectively.

However, it warned that those projections may slightly downplay the impact of tariffs resulting from the trade conflict between the US and China.

The IEA’s monthly report came ahead of a meeting between OPEC members and allies, including Russia, slated for 5 and 6 December to review their production policy and whether to keep their supply-cutting agreement in place.

By 9:36 am GMT, US Nymex crude futures edged down by 0.05% to $56.74 per barrel (pb), while global benchmark Brent futures fell by 0.32% to $62.08 pb.