Global oil supply is sufficient now, but natural declines at oilfields mean that the world would need to find a Saudi Arabia every two years to offset these production drops, Saudi Aramco’s chief financial officer Ziad Al-Murshed has said.
Due to the natural decline in operating fields, as many as 6 million barrels per day (bpd) of global oil production is being lost every year and needs to be replaced, Al-Murshed said at the Saudi Capital Market Forum 2024 in Riyadh.
The world is down to 3% of spare crude oil production capacity of global demand, Aramco’s executive said.
If there isn’t significant investment in oil production, the world could find itself short of spare capacity and supply, according to the manager.
Right now, Aramco sees sufficient supply on the market and believes that global oil demand has recovered, Al-Murshed said.
At the end of last month, Saudi Arabia surprised the oil market by announcing a shift in production capacity strategy. State oil giant Aramco said it was ordered by the Kingdom’s leadership to stop work on expanding its maximum sustainable capacity to 13 million barrels per day, instead keeping it at 12 million bpd.
Saudi Arabia’s decision to abandon the expansion plans is a result of the energy transition, Saudi Energy Minister, Prince Abdulaziz bin Salman, said earlier this month.
Global oil demand is expected to remain robust in the long term and the recent Saudi reversal of production capacity expansion shouldn’t be read as a view of falling demand, OPEC Secretary General Haitham Al Ghais said last week.
“First of all I want to be clear I cannot comment on a Saudi decision … but this is in no way to be misconstrued as a view that demand is falling,” Al Ghais told Reuters on the sidelines of a summit in Dubai.
By Tsvetana Paraskova for Oilprice.com
Oil: Natural Decline
Oil: Natural Decline
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil: Natural Decline
Global oil demand rose by more than 500,000 barrels per day (bpd) in December from November, for the eighth monthly record in 2023, the latest data by the Joint Organizations Data Initiative (JODI) showed on Tuesday.
Rising demand in Asia more than offset declines in the United States and Europe in the last month of 2023, said JODI, which collects figures reported by individual countries.
According to JODI’s database, oil demand rose by 541,000 bpd in December compared to November. The month-on-month oil demand increase was driven mostly by China, followed by Japan and India. These demand gains more than offset declines in the United States, Italy, and Germany, JODI’s data showed.
In fuels, global LPG demand rose to an all-time high in December while gasoline and diesel demand fell towards the five-year average. < This is why NGL prices have been going up.
In terms of global crude oil production, output rose slightly in December but fell by 300,000 bpd year-on-year, and was still marginally below the five-year average. Steep annual declines in output in Saudi Arabia – a drop of 1.5 million bpd – and Iraq were partially offset by a 1.1 million bpd output gain in the U.S. in December 2023 compared to December 2022, as well as from Canada and China, per JODI’s database.
Saudi Arabia, OPEC’s leader and the world’s top crude oil exporter, saw its production rise by 126,000 bpd month-on-month in December to 8.94 million bpd, while its crude exports fell by 28,000 bpd to 6.31 million bpd, the data showed.
Global crude inventories fell by 8 million barrels in December and were 275 million barrels below the five-year average, JODI said.
The drop in inventories and the strong demand – despite fears of the opposite – could further support oil prices this quarter, especially if the OPEC+ alliance decides to roll over all or part of the production cuts of 2.2 million bpd that are in place for the first quarter of 2024.
By Tsvetana Paraskova for Oilprice.com
Rising demand in Asia more than offset declines in the United States and Europe in the last month of 2023, said JODI, which collects figures reported by individual countries.
According to JODI’s database, oil demand rose by 541,000 bpd in December compared to November. The month-on-month oil demand increase was driven mostly by China, followed by Japan and India. These demand gains more than offset declines in the United States, Italy, and Germany, JODI’s data showed.
In fuels, global LPG demand rose to an all-time high in December while gasoline and diesel demand fell towards the five-year average. < This is why NGL prices have been going up.
In terms of global crude oil production, output rose slightly in December but fell by 300,000 bpd year-on-year, and was still marginally below the five-year average. Steep annual declines in output in Saudi Arabia – a drop of 1.5 million bpd – and Iraq were partially offset by a 1.1 million bpd output gain in the U.S. in December 2023 compared to December 2022, as well as from Canada and China, per JODI’s database.
Saudi Arabia, OPEC’s leader and the world’s top crude oil exporter, saw its production rise by 126,000 bpd month-on-month in December to 8.94 million bpd, while its crude exports fell by 28,000 bpd to 6.31 million bpd, the data showed.
Global crude inventories fell by 8 million barrels in December and were 275 million barrels below the five-year average, JODI said.
The drop in inventories and the strong demand – despite fears of the opposite – could further support oil prices this quarter, especially if the OPEC+ alliance decides to roll over all or part of the production cuts of 2.2 million bpd that are in place for the first quarter of 2024.
By Tsvetana Paraskova for Oilprice.com
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group