Global crude oil demand will increase at a “healthy” pace next year and refiners will enjoy improved margins, according to Bakheet Al-Rashidi, who was appointed Kuwait’s oil minister this week.
Demand will climb by 1.5 million barrels a day, Al-Rashidi said Thursday at his first meeting with reporters in his new role. That matches OPEC’s own forecast for this year and next year.
“That will support oil prices and support refining margins,” he said. “Refining margins will be better than this year because they are linked to demand growth.”
Kuwait is the fifth-biggest producer in the Organization of Petroleum Exporting Countries, with output at 2.7 million barrels a day in November compared with 2.86 million barrels a day at the end of 2016, according to data compiled by Bloomberg. OPEC and its allies have agreed to cut output to drain a global surplus through the end of 2018.
Kuwait is conducting a study to possibly raise its production capacity to 4.75 million barrels a day by 2040, he said. The country is still planning to reach 4 million barrels a day in 2020.
Kuwait’s capacity is currently 3 million barrels a day, according to data compiled by Bloomberg, while the country’s own estimates put that at 3.15 million barrels a day excluding the neutral zone area shared with Saudi Arabia.
Persian Gulf oil producers including Kuwait are adding and expanding refineries to meet greater demand at home and make fuel for export. The Duqm refinery project in Oman, a joint venture between Oman and Kuwait, is seeking $5 billion in loans from banks, with financing expected to close in the first quarter, Al-Rashidi said.
Construction would begin in the second half and take 42 months to finish, he said. The refinery will use Kuwaiti crude.
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