Expansions in supply from producers outside the 12-nation Organization of Petroleum Exporting Countries will more than cover the gain in global demand in 2014, according to the International Energy Agency. Daily non-OPEC output will rise by 1.7 million barrels as worldwide consumption adds 1.2 million barrels, the Paris-based adviser to oil-consuming nations says.
The U.S. will lead the gains as it taps shale reserves in North Dakota and Texas, the IEA said in a Dec. 11 report. Iraq plans more exports next year as part of its long-term strategy to triple production, Oil Minister Abdul Kareem al-Luaibi said Dec. 3. Iran will increase output if international sanctions are eased, Oil Minister Bijan Namdar Zanganeh said the same day. Libya will reopen export terminals closed by protests, Oil Minister Abdulbari al-Arusi said Dec. 21.
Expanding supply from Libya, Iran and Iraq is a “tail risk” rather than a probable outcome, said Societe Generale’s Wittner, the most bullish of the top seven analysts. Libya will remain “an unreliable source of supply,” higher output from Iran won’t materialize until later in the year and Iraq has repeatedly missed its expansion targets, he said. Wittner anticipates an average price of $108.
U.S. President Barack Obama, speaking in Washington on Dec. 7, assessed the chances of a comprehensive deal on Iran’s nuclear program as no better than 50-50. The nation, once OPEC’s second-biggest member, is producing about 930,000 barrels a day less than at the start of 2012, data compiled by Bloomberg show.
Libyan production is close to the lowest level since the uprising that unseated Muammar Qaddafi in 2011 as armed groups blockade eastern ports, oil ministry data showed Dec. 23. Iraq’s production of 3.1 million barrels a day in November was 7% lower than a year earlier amid attacks on pipelines and a dispute with leaders in the country’s Kurdish region, according to data compiled by Bloomberg.
A supply glut will be averted because Saudi Arabia, the biggest member of OPEC, will curb output if needed, Societe Generale’s Wittner said. The kingdom’s daily production swung from 8.75 million to 10.25 million barrels over the past several years, he said.