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OPEC said Tuesday it expects its oil supplies to fall continuously over the next five years, suggesting the cartel may need to keep cutting output to stabilize prices amid a bigger-than-expected U.S. production boom and sluggish oil demand.
The Organization of the Petroleum Exporting Countries and its allies are set to debate whether they will maintain current production cuts of 1.2 million barrels a day or deepen the reductions at a meeting on Dec 5.
But despite extensive curbs in the past two years, the cartel’s annual oil-market outlook says its supply will fall by another 1.6 million barrels a day by 2025. By contrast, OPEC had predicted last year its output would rise by 500,000 barrels a day during the period.
In the report, OPEC said the downgrade was tied to a faster-than-expected increase in new American oil produced through hydraulic fracking.
“U.S. tight oil has again outperformed expectations,” the report said, saying it would increase by 6.7 million barrels a day in the medium term.
An expanded version of this article appears on WSJ.com
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