Oil prices will take decades to recover and will still not reach the peak seen in recent years, according to the latest World Oil Outlook (WOO) from OPEC.
In the group's latest outlook on supply, demand and prices to 2020 and 2040, OPEC predicted that a barrel of oil would cost around $70 by 2020 and $95 by 2040, a far cry from a high point of $114 a barrel last seen in June 2014 before prices began to plunge on oversupply, CNBC reported.
On Wednesday, a barrel of benchmark Brent crude cost $36.51, a shade above WTI at $36.47.
Price declines were exacerbated by the decision last year by OPEC, led by Saudi Arabia, not to cut production. Still, OPEC's Secretary-General Abdalla Salem El-Badri said OPEC had been a bastion of stability amid volatile times for the oil industry.
"The supply and demand balance in 2015 has been one of oversupply, with stock levels rising to well above the five-year average," El-Badri noted in the foreword of report. While the oil price plunge has been largely down to an oversupply, demand for oil has been strong but just not strong enough.
Looking at potential future demand in its outlook, OPEC predicted oil demand to rise to 97.4 million barrels per day by 2020, a slight rise of 500,000 barrels a day compared to last year's outlook. By 2040, OPEC predicted overall demand to be close to 110 million barrels a day – a decline of around 1 mb/d on last year's forecast.
OPEC has long predicted that the supply of oil from producers outside of the OPEC group would contract next year, just as world oil demand rises, and reiterated that prediction in the WOO.
As non-OPEC supply faltered, OPEC would be there to meet demand, El- Badri said.
"From the supply perspective, in last year's WOO, non-OPEC liquids were expected to rise to 61.2 mb/d by 2020, whereas this year the number has dropped by 1million barrels a day to 60.2 mb/d. All this means that by 2020 the requirement for OPEC crude is anticipated to be at 30.7 mb/d, an increase of 1.7 mb/d from last year," El-Badri said.
The forecast for demand had declined, however. "Overall demand by 2040 is at close to 110mb/d, around 1mb/d less than in last year's WOO. This is the result of further energy efficiency improvements, environmental policies, as well as slightly lower long-term economic growth estimates," OPEC's secretary-general said.
