The Organisation of the Petroleum Exporting Countries might need to add an extra 800,000 barrels daily to the 1.2m BPD of production it currently keeps out of the supply market to keep prices stable.
Energy research group, Rystad, made this prediction, saying the price of the commodity could fall to the $40-50 bracket if the cartel and its Russian-led allies choose to retain current output restrictions.
The head of Oil Market Research at Rystad Energy, Bjorna Tomhaugin, said, “The outlook will be bleak if OPEC+ fails to agree on additional cuts.
“We have a clear message to the OPEC+ countries: A ‘roll-over’ of the current production agreement is not enough to preserve a balanced market and ensure a stable oil price environment in 2020.”
Tomhaugin noted that there will be an imbalance in the market to the tune of 0.8m barrels if OPEC maintains current volumes.
“In order to ensure a balanced market, our research indicates that OPEC would need to reduce crude production to 28.9 million bpd – a drop of 0.8 million bpd from the level seen in the fourth quarter of 2019-levels – given our forecast for demand, non-OPEC supply and the impact of new IMO 2020 regulations on global crude runs.
“If OPEC and Russia don’t extend and deepen their cuts, we could see Brent Blend dip to the $40s next year for a shorter period,” Tonhaugen added.