Last week, the International Energy Agency (IEA) presented its annual market outlook, which contains prognoses for the development on the markets during the forthcoming years. Regarding the oil market, the IEA projects, that production during 2020 will stay more or less unchanged compared to this year. Demand is set to increase slightly.
In the report, the IEA projects that the production from the OPEC countries will fall by around 1 million barrels per day in 2020 and average around 29 million barrels per day. Meanwhile, production from the non-OPEC-nations is set to increase by 1.8 million barrels per day, meaning that we will see a slight total increase in global production if the IEA is right about their estimates. Meanwhile, the agency expects an increase in global demand of around 1.2 million barrels per day.
When reading the figures, it has to be taken into account, that it is still officially up in the air, how the OPEC oil production in 2020 will look. In December, the organisation will have a summit where the production for the coming year will be planned, and the IEA estimates are only based on the agency’s expectations to the meeting. There is however a general expectation among analysts that the cartel will prolong the current deal on production limitations.
An unknown factor on the oil market in 2020 will be the US-Chinese trade war. The conflict is hampering the global growth, and if it continues full-scale during 2020, it will affect the oil market as well. The IEA does not make any estimate for the oil price development during 2020, but if the prognoses about production and demand area right, we will likely not see any major changes from the current level. The price on a barrel of Brent oil is currently around 63 US dollars.