In the report, the global natural resources consultancy said it expects production growth to continue in the US Lower 48 over the medium-term, but added that once the US plateaus, total non-OPEC liquids production will “lose its growth momentum and begin to decline slowly post-2030”.
“With demand continuing to grow through to its peak in the mid-2030s, the industry must find increasingly expensive oil to offset declines from a maturing asset base. To balance the market in the long-term, there is increasing reliance on OPEC continuing to exploit its available reserves,” Wood Mackenzie said in the report.
“And as reliance on OPEC ramps up, so does the importance of geopolitical risk as a key determinant for both supply and price,” Wood Mackenzie added.
The consultancy said increasing geopolitical tension continued to add uncertainty to its long-term forecast.
“The return of US secondary sanctions against Iran and the political and economic turmoil in Venezuela stand out as the key wildcards; but the outlook for countries like Libya, Nigeria and Iraq will also be heavily dependent on political stability,” Wood Mackenzie said in the report.
In the report, Wood Mackenzie stated that OPEC has played a “critical” role in rebalancing the global oil market over the past 18 months.
“The global supply and demand balance has tightened, with OECD inventories falling below their five-year average. Much of the shift from oversupply in 2016 to the current rebalanced oil market is due to the production restraint agreement reached at end-2016 put in place by OPEC and its non-OPEC partners,” Wood Mackenzie said in the report.