The Organization of Petroleum Exporting Countries (OPEC) warned at its meeting Thursday about the possible supply-demand gap next year, which could hurt global oil market and crude prices.
The President of the OPEC Conference Suhail Mohamed Al Mazrouei said during his opening speech for the 175th meeting of the OPEC conference in Vienna that indicators point to "higher supply growth than expected global requirements" and "a potential slowdown in demand."
"It is vital that we thoroughly examine the potential gap between supply and demand in 2019, and how this might impact inventory levels and the extremely ‘hard won’ market balance we have achieved over the past two years," said Al Mazroue, who is also the United Arab Emirates Minister of Energy and Industry.
A gloomy outlook for global economic growth in 2019 could bring overall oil demand down, at a time when U.S., Russia and Saudi Arabia are all pumping crude at record high levels increasing global oil supply.
This could hurt the balance in the market that was achieved by OPEC and its allies outside the cartel, who agreed on November 2016 to cut 1.8 million barrels per day (mbpd) of crude oil from the global market and extended that agreement until the end of 2018.
Al Mazroue said this year was positive for OPEC and its allies, dubbed together as OPEC+, as they made progress in removing the high level of oil inventories and managed to rebalance the supply-demand in the market.
However, crude oil inventories could once again increase in 2019 if OPEC+ countries agree to an output cut that is lower than market expectations.
Saudi Arabia Energy Minister Khalid Al-Falih was reported before the conference saying that a total of 1 mbpd of output cut by OPEC+ would be sufficient, according to CNBC.
Oil market analysts were expecting an output cut between 1.2 mbpd and 1.4 mbpd.
Al-Falih's remarks caused concern for investors that oversupply in the global market could remain throughout 2019, and push crude prices lower.
International benchmark Brent crude fell to as low as $58.42 per barrel on Thursday before 0935 GMT, extending its daily decline to 5.1 percent.
American benchmark West Texas Intermediate plummeted to $50.24 a barrel around the same time for a daily loss of 5 percent.
OPEC will hold a press conference later on Thursday after member countries' closed session concludes. The cartel will also hold a meeting with non-OPEC oil producing nations on Friday.
By Ovunc Kutlu