World Oil Supply
OPEC Monthly Oil Market Report – October 2017
Non-OPEC oil supply highlights in 2018
Non-OPEC production is expected to increase next year, primarily as a result of projects that were approved
before the 2014 price collapse. When the WTI price remained below $50/b for a longer period, US production
growth slowed as the oil rig count declined. Lower prices are beginning to weigh on US shale oil activity as
concerns mount that aggressive development could lead to output declines. Oil prices are expected to
remain at $50-55/b in the next year. A rise above that level would encourage US oil producers to expand
their drilling activities, otherwise the lower prices could lead to a reduction in their Capex.
According to recent information, key shale oil producers are basing their plans on a price of $50-55/b.
Leading companies such as Chesapeake and Pioneer have said that they are making investment decisions
based on prices staying around $50/b. Nevertheless, other more structural factors have played a role. These
include flat-to-lower oil well productivity in key regions since last year, particularly in the Permian and Eagle
Moreover, a drop of about 20% in drilling efficiency since 3Q16, increased service costs (10% higher y-t-d)
and production costs - due in part to the use of heavier proppant and higher frack stages - are the main
challenges that US producers are facing and are likely to continue to weigh on supply growth momentum in
the coming year. This accounts for the recent downward revisions for US and non-OPEC supply for the
current year, by major institutions and sources. The supply forecast for next year will be revised downward if
higher oil prices and lower costs do not materialize.
Non-OPEC supply in 2018 is expected to grow by 0.94 mb/d, following a downward revision of 0.06 mb/d in
this month’s assessment, to average 58.64 mb/d. This is mainly due to the lower supply level of Russia
which was revised down for next year’s forecast and is now expected to decline by 0.01 mb/d to average
11.03 mb/d in 2018. The US, Brazil, Canada, the UK, Australia, Kazakhstan, Ghana and India are expected
to be the key countries driving growth next year, in contrast to China, Mexico, Colombia, Azerbaijan and
Oman, which are expected to see a further decline in oil supply.
Graph 5 - 4: Non-OPEC liquids supply quarterly
Graph 5 - 5: Non-OPEC oil supply, 2016-2018
Graph 5 - 5
highlights actual non-OPEC quarterly oil supply in 2016 and the forecast for 2017 and 2018. The
quarterly distribution for non-OPEC supply in 2017 indicates the regular seasonal pattern due to
maintenance work, particularly in offshore areas, but with higher production levels compared to the same
quarters in 2016. It is forecast that 4Q17 will be the highest quarter at 58.28 mb/d for oil supply compared to
other quarters. For 2018, due to the increase in US shale production, higher growth is expected, as well as a
higher quarterly distribution throughout the year.
1Q 2Q 3Q 4Q
Note: * 2017 and 2018 = Forecast.
Source: OPEC Secretariat.
Y-o-y change (tb/d)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Source: OPEC Secretariat.