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Fri, Nov 15, 2024 | Jumada al-Awwal 13, 1446 | DXB
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New projects, shale boom to trigger oil glut in 2018-19
The Opec's landmark decision to limit output for the first time in eight years is unintentionally helping the shale producers.
"2017-19 is likely to see the largest increase in mega projects' production in history, as the record 2011-13 capex commitment yields fruit," the US investment bank said in a research note on Tuesday.
The Opec's landmark decision to limit output for the first time in eight years in a bid to arrest the existing supply glut reduced price volatility and increased stability, unintentionally helping the shale producers, the bank said.
"Opec's decision in November 2016 to cut production was rational, in our view, and fit into its role of inventory manager of last resort," Goldman said.
"However, the unintended consequence was to underwrite shale activity through a bullish credit market at a time when delayed delivery of the 2011-13 capex boom could lead to record non-Opec production growth in 2018."
The Organisation of the Petroleum Exporting Countries agreed to curb its output by about 1.2 million bpd from January 1 this year. Russia and 10 other non-Opec producers agreed to jointly cut by an additional 600,000 bpd. - Reuters
- By
- Vijaykumar Vedala
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