The International Energy Agency said in its latest monthly report that global oil output in 2020 will continue to exceed demand but will rebound in 2021 as the oil market rebalances, providing OPEC+ cuts ease and a handful of countries, including Guyana, deliver solid gains.
Last December, US oil major ExxonMobil began producing oil at the Liza Phase 1 Development offshore Guyana and is expected to ramp up production to a peak rate of 120,000 barrels per day in coming weeks. This is the first in a series of multiple developments offshore the South American country that will see production exceeding 750,000 barrels per day by 2026.
The IEA estimates that Global oil output will remain above that of demand in 2020, dropping by 7.2 million b/d. In 2021, oil output is set to limp back to life with a 1.7 million b/d recovery, IEA said, “assuming OPEC+ cuts ease, Norway, Brazil and Guyana deliver solid gains and Libya manages to sustain a rebound.”
S&P Global says the IEA’s prediction contains many caveats given OPEC+’s ongoing market management strategy has had many about-turns, while Libya’s civil strife means it remains a potential 1 million b/d wildcard. The agency is also downbeat on the speed of any revival in US output, predicting supply tumbling 900,000 b/d this year and dropping 300,000 b/d in 2021 unless prices recover to a level that injects fresh life into the shale patch.
While Guyana is currently going through a period of political uncertainty with no results from an election that took place since March 2, analysts believe that this internal conflict will ultimately be worked out, particularly due to pressure from the international community for a transparent conclusion in keeping with democratic norms.
Consultancy group Wood Mackenzie expects Guyana’s output to surpass 1.1 million barrels per day by 2028, making it just the 11th nation in oil’s history to reach the 1 million b/d milestone.