The price of Organisation of Petroleum Exporting Countries, OPEC basket of 12 crudes has risen from $105.21 to $106.06 per barrel, according to OPEC Secretariat calculations.
This raises hope that oil producing and exporting nations, including Nigeria would be in a position to generate adequate funds for the execution of their 2014 budget.
The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
There are also indications that the price of OPEC basket would continue to remain stable in excess of the $100 per barrel in the coming months.
In the past few weeks, oil market stability has become a major concern to mansy stakeholders in the global community.
The Secretary General of OPEC, Dr. Abdalla S. El-Badri stated that, “In looking at the overview of this session, it is clear that there is a specific focus on global oil supply, both now and in the future. There is mention of an abundance of supply, and the potential for production increases in both OPEC and non-OPEC countries.
He said, “It is interesting to see such topics now listed on conference agendas, given that only a few years ago there was much talk of there not being enough resources, and that supply would struggle to keep up with demand.
El-Badri said, “At OPEC, we have been consistent in voicing our opinion that the world has enough resources to meet expected demand. And technological advancements continue to help the industry increase the estimates of the amount of oil and gas that can be found, and that can be recovered, extending its reach into harsher and more remote locations in ‘frontier areas’. What was once described as ‘impossible’ oil has today become ‘possible’.
He said it is evident that non-OPEC supply developments have been a central element in this change, particularly US tight oil.
The Secretary General said, “These tight oil developments are welcome. They add depth and diversity to global supply, aid market stability and provide further proof that the world is not running out of oil. In a 2013 report, the US Energy Information Administration’s assessment of technically recoverable global tight oil resources was 345 billion barrels. This was
much higher than its 2011 assessment of 32 billion barrels. And these estimates are likely to change again in the future.
He said, “It is important to stress that the figure is relatively minor when compared to the already known conventional resource base. In 2012, the US Geological Survey estimated that the world’s ultimately recoverable resources of crude oil and natural gas liquids were more than 3.8 trillion barrels.
El-Badri said, “So in terms of resource availability; there remain more than enough resources to meet demand for the foreseeable future. In respect to actual production capacity, however, we have undoubtedly seen a transformation in the US with tight oil adding new capacity over the past few years.
He said, “But I think we can all recognize that there remain questions over how sustainable these tight oil developments will be in the long-term. For example, many wells are already experiencing sharp decline rates – in some cases 60% after one year. In OPEC’s World Oil Outlook (WOO) 2013, we see US tight oil, including NGLs, reaching 4.9 million barrels a day by 2018, before declining in the years following.
The Secretary General said a number of other non-OPEC regions are also expected to see strong supply growth, both in the medium- and long-term – regions such as Brazil and some countries in Central Asia, particularly Kazakhstan.
He said, “And of course OPEC continues to invest – to maintain existing capacity and add new production as well. However, like any investments, they will be influenced by various factors – such as policies, the price of oil and overall economic conditions. Given all this, it is easy to see why current talk might be of ‘supply abundance’. But we do need to be careful about what this really means.”