Global crude markets will remain well supplied in 2013 to meet growing demand and OPEC doesn’t expect prices to drop this year, OPEC Secretary-General Abdalla El-Badri said.
“At present the market is well-balanced. Looking ahead for 2013 the market is expected to remain well-supplied to meet expected demand growth,” he said during a conference at Chatham House in London today. Resource availability to meet growing demand “is not an issue,” he said.
The Organization of Petroleum Exporting Countries doesn’t “envision a price collapse” in 2013 and concerns about geopolitical instability “should not be overblown,” he said.
Brent crude oil prices have closed above $110 a barrel every day this month after rallying 3.5 percent in 2012 to $111.11. OPEC, which supplies about 40 percent of the world’s oil, cut crude output by 465,000 barrels a day in December to 30.4 million barrels a day, the lowest since October 2011, led by a reduction in Saudi Arabia, the group said in a Jan. 16 monthly report. That’s still 800,000 a day more than the average 29.6 million the group estimates it will need to supply to consumers in 2013.
There is no need for OPEC to cut oil supply if economies are struggling, El-Badri said. OPEC meets next on May 31.
Success that the U.S. has had in building up production from oil shale deposits will be difficult to match in other countries because that industry is still at “very early development stages,” he said. “Questions remain about how sustainable this growth will be in the long term,” he said.
Peak oil will not come in the near future, El-Badri said, referring to the theory than eventually a point in time will arrive when total world production will start to decline from the highest level it will ever reach.
“We appear to have moved on from the peak oil debate the industry was having only a few years ago,” he said. “Peak oil will come one day but not for the foreseeable future.”