Oil markets will continue to be oversupplied for as long as five years as producers in the Middle East ramp up output, according to Mohammed al-Shatti, Kuwait’s representative to the Organization of Petroleum Exporting Countries.
"Lower prices will continue until the glut in the market ends," al-Shatti said in an interview Saturday in Doha, Bloomberg reported.
"Many countries are expected to increase production. Iranian crude is expected to return and that means an increase in production," he said.
Iraq pumped a record 4.4 million barrels a day in June, according to data compiled by Bloomberg. Libyan output, which has declined by more than half due to conflict, can return "at any moment," al-Shatti added.
Iran has the capacity to boost exports by 500,000 barrels a day within one week of sanctions being lifted and by 1 million a day within six months, Roknoddin Javadi, managing director of state-run National Iranian Oil Co., said last month.
Demand is not expected to absorb the extra capacity and it will take shifts in supply to affect prices, he said.
The official said geopolitical disruptions or reduced future output because of the 30% fall in capital expenditure by oil companies could cause an increase.
OPEC, of which Saudi Arabia is the largest producer, decided in December and again in June to keep its production target unchanged at 30 million barrels a day. The group has exceeded this official target every month since May 2014.
