OPEC faces discord, but oil remains the energy source of choice as demand is set to rise dramatically to 2040
OPEC is in the midst of one of the worst oil supply gluts in history, with a catastrophically low price of $30 a barrel.
Despite this and the recent death of King Abdullah, Saudi Arabia's oil policy remains unchanged, claiming it will allow the market to balance itself while the Kingdom maintains its oil output levels. With a budget break-even point of around $63 a barrel, Saudi is set to run a significant deficit this year, but this is against a backdrop of cash reserves of $800bn.
However, other OPEC nations such as Nigeria, do not have the luxury of the cash cushion. Nigeria itself is the largest oil-producing country in Africa and depends on oil for 95% of its foreign currency reserves. However, a recent currency collapse and inflation at almost 10% has put Nigeria, amongst other nations, in conflict with Saudi.
With Iran set to boost post-sanction oil production, the complexities of the situation prompted a strong response from United Arab Emirates Energy Minister, Suhail Mohammed Al Mazrouei, in an interview with US news channel CNN.
Saudi Arabia's continued oil production levels are likely to force a contraction in supply from non-OPEC producers; US shale operators are already feeling the pinch. Russia, despite concilliatory noises, is still refusing to co-operate with any potential output agreement stating that its fields and weather conditions differ from the Gulf.
However, the short-term pressures have had little influence on ExxonMobil's longer-term view of the future which sees oil leading the way in meeting the world's increasing need for energy. Its report - The Outlook for Energy - predicts a rise in global energy demand from 2014-2040 of 25%. Amongst the report's claims:
- In 2040, oil and natural gas will likely be nearly 60% of global supplies, while nuclear and renewables will be approaching a 25% share.
- One third of the world's energy is expected to be provided by oil in 2040.
- After rising more than 50% from 1990 to 2014, global energy-related CO2 emissions are likely peak around 2030.