JEDDAH – Surging US production has been the supply-side story of 2012. But with other non-OPEC producers struggling to fulfill their promise, the impact of the rise in shale-oil production may be muted by weak performance elsewhere in 2013, Gulf Oil Review (GOR) said Thursday. In the year ahead, GOR forecast that OPEC output would remain strong, but with only a few member countries able to increase production from current levels. For instance, Libya has reached its pre-war disruption level of around 1.6 million b/d. “At best, we expect it to maintain this production level. A slight decline in its output, seen in recent months, may even continue.” Iraq can increase its production from current levels of around 3.2 million b/d, but is less likely to reach the official target 3.7 million b/d in 2013. All told, net non-OPEC supply growth in 2012 will amount to just 500,000 b/d at best. In 2013, non-OPEC supply outside the US is expected to perform better, though the range of estimates is wide, from 100,000 to 500,000 b/d. GOR ruled out any structural shift in non-OPEC supply dynamics beyond the US. Indeed, if anything, supplies from this segment of the market are likely to surprise on the downside for yet another year. There are two extreme scenarios for 2013: the first would see a glut of supply amid falling global demand, forcing OPEC to cut output and put a floor beneath the price. The second sees non-OPEC supply lower than expected, global demand rebounding strongly, the geopolitical situation worsening and OPEC struggling to fill the gap, prompting a sharp rise in oil prices. The outlook for 2013 is likely to fall somewhere between these two extremes, with oil prices continuing to trade within the range established in recent months. – SG
