EIA revises downward forecast of world oil production
The EIA forecast world oil production to average 98.9 million barrels per day (b/d) in the second half of 2021 (2H21), down from a July forecast of 99.4 million b/d.
Which is the reason? The lower forecast production from OPEC, which is only slightly offset by increased production forecast in Russia.
With respect to 2022, the EIA projected that world oil production will average 101.8 million b/d, 20,000 b/d less than it forecast in July.
In the August Short-Term Energy Outlook (STEO), the IEA forecasts larger-than-expected global oil inventory declines in 2021 and larger inventory build-ups in 2022.
More than anything, the changes are driven by forecast changes in OPEC and Russian production as a result of the recent OPEC + deal.
Concerns about declining demand due to increased Covid-19 cases have driven crude prices down recently, offsetting some initial price increases due to increased inventory removal.
As a result, its crude oil price forecast remains largely unchanged from the July STEO.
However, the EIA has revised down its forecast for total world oil production.
On July 18, OPEC +, which includes OPEC and several non-OPEC members (including Russia), agreed to increase monthly crude oil production starting in August 2021.
World oil production
In early July, OPEC + members suspended their sessions without reaching a new crude production agreement.
Negotiations stalled due to disagreements between Saudi Arabia and the United Arab Emirates (UAE) over the benchmark levels against which members’ production cuts should be measured.
In the deal announced on July 18, OPEC + members agreed to increase production by 400,000 b / d each month starting in August 2021.
This agreement is in addition to production increases that have already taken place through July 2021, including the full reversal of Saudi Arabia’s voluntary policy of cutting production of an additional 1 million b/d.
