On Tuesday (Sep 21), Reuters reported that oil supply from OPEC+ could be insufficient to meet the world’s growing demand.
The OPEC+ group lifted its production in August, but factors such as underinvestment and maintenance work has hampered the group’s ability to raise production.
Oil demand in 2021 rose to near-record levels as global activities resume despite the on-going pandemic.
Witnessing the demand for oil, OPEC+ agreed to boost oil production starting August by another 400,000 bpd each month. But not all producers have been able to produce more barrels.
Members of OPEC+ such as Nigeria, Angola, and Kazakhstan have been unable to increase their oil production to meet the demand. In the case of Kazakhstan, the maintenance in its Tengiz field hindered the calls for more oil production. Nigeria and Angola couldn’t respond quickly as years of underinvestment in their oil industry meant that they couldn’t cope with the rising demand.
At present OPEC+ is sticking to its plan in increasing oil production by another 400,000 bpd in October and November respectively.
Meanwhile, the situation in the United States is not good either. Hurricane Ida hampered the United States oil production whereby it was reported that production of oil dipped by 1.5 million bpd in recent weeks. This of course adds to the tight supply situation created by OPEC+ members.
Over in Europe, as winter is approaching, the price for natural gas is skyrocketing and due to the inadequate production, this could increase the demand for crude oil as gas supplies run thin.
The International Energy Agency predicted in August 2021 that the global oil demand will rise 5.3 million barrels per day but some analysts are predicting now that the number could be higher.