OPEC Claims a Robust Oil Demand with Positive Potential Growth in 2020

The OPEC Secretary General Mohammed Barkindo told CNBC last Friday (17 January 2020) that worldwide oil demand could surprise to the upside over the course of 2020.

Barkindo pointed that the demand growth is still tough and could be surprised as a trade tensions diminish. “By and large what we see from our side is an upside potential of growth from the demand side of the equation, which will affect the total balance for the rest of the year,” he said. “We are hoping that some of the challenges that we’re facing in terms of international trade will be addressed.”

At the end of 2019, the oil demand gained almost 35%, but prices remained lower than the previous high as the US has increased producing on shale, which Barkindo considered as a “Major variable in OPEC’s decisions”.

In December, OPEC+ agreed to cut production by addition 500,000 barrels per day for the first quarter of 2020. Due to the cut of production, this reached the total cut to 1.7 million barrels per day, beyond the cut agreement in December 2018. While Saudi Arabia will continue cut of 400,000 barrels per day, therefore, its alliance could cut 2.1 million barrels per day.