Medium term oil outlook: Merrill Lynch Part 2

Medium term oil supply outlook

  • The sharp decline in oil prices will have a huge medium term impact on global supply via capex cuts, project deferrals and field declines.
  • The supply response will take time to develop.
  • Merrill Lynch still project non-OPEC supply growth at approximately 1 million bpd this year.
  • Most of the downward adjustment in the short run is likely to come from the US.
  • The collapse in prices, coupled with a meaningful increase in volatility, will likely have huge consequences for medium term oil supply for years to come.
  • Merrill Lynch estimates total annual oil and gas industry capex slightly below US$800 billion, with the four majors plus Aramco accounting for US$180 billion.
  • Outside the US, Canada has been the main driver of non-OPEC supply growth in the last five years, with net additions of 980 000 bpd.
  • The Russian Federation may end up losing out over the medium term after the collapse in global oil prices.
  • Mexico should end up being a big medium term loser out of the global collapse in oil prices.
  • Oil output declines in the North Sea are as predictable as the weather.
  • Asian oil production declines will continue across the board.

Saudi Arabia

  • The Saudi current account break even oil price sits at approximately US$67/bbl, which would only make it a net external creditor if oil prices rebound sharply.
  • Saudi would be facing a current account deficit of 8.5% of GDP if oil averages US$50/bbl this year.
  • The fiscal breakeven oil price is US$94/bbl, following the recent stimulus.

Edited from report by Claira Lloyd

Published on 16/02/2015


Get your FREE Oilfield Technology magazine »

Get your FREE trial of Hydrocarbon Engineering magazine »

Get your FREE trial of World Pipelines magazine »


 
 

Related articles

Medium term oil outlook: Merrill Lynch Part 1

Highlights from Merrill Lynch’s medium term oil outlook.

Outlook for Energy 2015

ExxonMobil to Launch 2015 Outlook for Energy.

Outlook for the oil market

At the 18th ERTC Annual Meeting, Istvan Zsoldos, MOL presented the opening keynote address: Short and Long term outlook for the oil market.

Outlook for the worldwide sulfur market

The worldwide sulfur market is facing a glut of product as refiners look to process heavier crudes and oil sands. While a short term recover is to be experienced, long term market stability will rely on the development of new uses for the product.

Recommend magazines

  Hydrocarbon Engineering  Oilfield Technology  World Pipelines