London, 14 October (Argus) — TotalEnergies chief executive Patrick Pouyanne said he expects Opec+ to exert greater control over the oil market once production growth outside the group begins to slow.
Non-Opec+ output has risen sharply over the past decade, driven by the US shale boom, Guyana’s emergence as a major exporter and Brazil’s development of pre-salt reserves. But these sources of growth will plateau, Pouyanne told the Energy Intelligence Forum in London today. “There is a limit in the growth,” he said.
While the market is “a little bearish” in the short term, plateauing non-Opec+ supply — combined with rising demand, higher natural decline rates and Opec’s preference for stronger prices — is “quite bullish” longer term, Pouyanne said. “Opec countries prefer to have $60-$80-$90/bl than $/bl,” he said.
Front-month Ice Brent and Nymex WTI futures have fallen by around $5/bl over the past month to just over $62/bl and $58/bl, respectively. This has been partly driven by key Opec+ members unwinding large production cuts, which has boosted their share of the crude market.
If sustained, prices at this level will affect US shale oil output, ConocoPhillips chief executive Ryan Lance told the conference.
“If [WTI] prices stay at $60/bl or go to the $/bl, you’re probably plateauing or slightly declining,” he said. “If they go back to $65/bl or $70/bl longer term, you probably hold the plateau for a little bit longer.”
In either case, Lance expects US crude output to hold at around 13mn-13.5mn b/d “for quite some time, because the resource is immense”. This aligns with the EIA’s forecast, which sees US crude production rising by 300,000 b/d to 13.5mn b/d in 2025 and holding steady in 2026.
Like Pouyanne, Lance sees prices rising over time. “I think the mid-cycle oil price has to come up to generate the supply to meet demand. So you might set a mid-cycle price to $/bl today, but I think it’s going to $/bl over time.”
Both TotalEnergies and ConocoPhillips expect oil demand to keep rising for years. “There is no peak demand. I don’t know this story,” Pouyanne said. “They are continuing to grow… demand, even if it’s slower than the year before because of the macro environment.”
ConocoPhillips sees demand rising by about 1mn b/d each year “well into the next decade,” Lance said.
By Aydin Calik
