World oil prices remained close to the $100-per-barrel mark last night as BP said Opec was set to increase its share of global oil production to levels not seen since the oil shocks of the 1970s.
In the BP Energy Outlook 2030, the oil giant predicted that the producers' cartel would see its share rise to 46 per cent during the coming two decades – "a position not seen since 1977", just years after an Opec embargo triggered the oil crisis in 1973.
The projection came as US crude oil prices touched intra-day highs of around $91.8 per barrel, while ICE Brent futures for March rose to $98.6 per barrel at one point.
Prices have been rising steadily in recent weeks amid debate over whether or not Opec should to increase oil supplies. Earlier this month, Fatih Birol, the chief economist of the International Energy Agency (IEA), which speaks for the big oil consumers in the West, gave warning that prices were entering a danger zone and threatening the still-fragile global economic recovery.
This week, the IEA raised its oil-demand growth forecast for the year to 1.41 million barrels per day, lower than last year's jump in consumption, but higher than Opec's growth estimate of 1.23 million barrels per day.
The cartel, which decided against raising output at its last meeting in December, believes the world is well supplied, blaming the high prices on "technical matters" such as the recent disruption to the Alaskan route that supplies more than 10 per cent of US crude oil, and outages in the North Sea.
"Also the weak dollar and speculation have added to this, pushing oil prices higher, especially Brent," said Opec's secretary general, Abdalla Salem el-Badri. Recent reports have indicated that the oil trader Hetco has cornered 30 per cent of Brent market.
Despite the official line, however, the IEA suggested that Saudi Arabia, the cartel's most influential member, may have quietly raised output to temper higher oil prices.
Market sources were sceptical about the assessment, with one of the country's major buyers saying that they had not seen evidence of an increase in Saudi supplies. A recent survey also suggested that the kingdom's output was flat in December. Looking beyond the short-term picture, BP yesterday published its energy outlook for the next 20 years, predicting an increase in Opec's share of global oil production.
"At the same time oil – and gas – import dependency in the US is likely to fall to levels not seen since the 1990s because of improved fuel efficiency and the increased share of biofuels," the oil giant said.
BP's report also expects global consumption growth to be impacted by the higher oil prices seen in recent years and a gradual reduction of subsidies in oil-importing countries. Overall, China, India, Russia and Brazil are set to dominate the growth in energy demand, while the improvement in energy-efficiency measures "are set to accelerate".
In terms of the energy mix, BP said the growth in oil demand – seen at 0.6 per cent per year – is likely to lag behind natural gas, which is expected to be the fastest-growing fossil fuel with more than three times the projected growth rate of oil at 2.1 per cent.
"In percentage terms, oil demand is reduced the most in the power sector (minus 30 per cent) because this is the easiest oil to displace with gas or renewables and is the sector most likely to employ carbon pricing," BP's chief economist, Christof Ruehl, said.