March 8, 2024 [BNN Bloomberg]- Global oil consumption is strong and the market looks relatively balanced this year as OPEC+ tries to stabilize prices, according to the Chief Executive Officer of Kuwait Petroleum Corp.

The market is expected to tighten further as the year goes on, Sheikh Nawaf Al-Sabah, said in an interview. US shale production has helped meet some of the recent growth in demand, he added.

The Organization of Petroleum Exporting Countries and its allies have extended supply cutbacks to the middle of the year to prop up prices. So far in 2024 those measures have shown some signs of success, with crude trading above $80 a barrel as robust demand and Red Sea disruptions lift prices.

“From my perspective I think it remains a healthy market on the demand side,” Sheikh Nawaf said. “We all now have spare capacity, that’s also quite important for stability in the market, to know that there is additional capacity in case of a supply disruption.”

Kuwait still plans to boost production capacity to 4 million barrels a day by 2035, on the back of a still-strong demand outlook. “It’s part of our strategy, because we believe that the call on Kuwaiti crude will reach that number.”

The Gulf state is looking to spend as much as $100 billion by 2050 to reduce the carbon intensity of its oil production. “We’re investing more and concentrating more on decarbonization efforts to ensure our hydrocarbons remain the lowest carbon intensive ones in the market,” he said.

In a wide-ranging interview, Sheikh Nawaf added:

• Kuwait’s new Al-Zour refinery has been taken to its full capacity of 615,000 barrels a day, producing mostly diesel-like fuels; KPC is optimizing throughput based on commitments to customers on crude versus product
• Kuwait is selling mostly distillates from Al-Zour with most product going to Europe
• KPC is in the process of establishing a Dubai-based fuel trading unit as it prepares to boost its volumes of refined products sales. The business will be based in Dubai and should be up and running this year
• He sees room for growth in both OPEC+ production and US shale production in the long-term as consumption rises
• The country saved $1 billion in 2022 by burning diesel for power generation instead of natural gas; Al-Zour has been a “strategic project” for Kuwait, giving country more options in how it markets hydrocarbons
• The market is “seeking stability, and we seem to be approaching that;” it can absorb all the supply, which will be needed as demand rises
• Demand increases will be robust, “but there are concerns around the supply chain itself and recent geopolitics,” which KPC assesses daily.

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