Saudi Arabia's oil market share will reach its highest since 1980 in the next ten years

A report from the J.P. Morgan investment bank predicts Persian Gulf oil leadership against other competitors
Saudi Aramco oil facility in Abqaiq, Saudi Arabia

REUTERS/MAXIM SHEMETOV  -   Saudi Aramco oil facility in Abqaiq, Saudi Arabia

Saudi Arabia's share of the oil market will reach its highest level since 1980 in the next 10 years, according to a report by the J.P. Morgan Investment Bank and picked up by Reuters. It is expected that the market share of Saudi Arabia to increase from 11.6% in 2020 to 15% the next 2030. The leadership of Persian Gulf oil will be as a result of the lack of production in other countries due to the coronavirus crisis.

il prices have plummeted by more than 40% following an unprecedented collapse in demand, leading oil and gas companies to announce $625 billion in spending cuts by the end of this decade, according to the agency's report. "The investment crisis will lead to a loss of production that will push Brent oil prices to $60 per barrel in two years," said J.P. Morgan analyst Christyan Malek, speaking to Reuters. The Brent fell to $16 a barrel in April, when the pandemic forced the economies around the world were shut down as a result of the spread of the coronavirus. The price has risen in recent weeks to $40 per barrel.

Director General
REUTERS/AHMED YOSRI - Amin H. Nasser, President and CEO of Saudi Aramco

The U.S. bank expects global oil demand to average 91 million barrels per day (bpd) by 2020, nine million less than previous estimates, with consumption only recovering to pre-pandemic levels of 100 million bpd by November 2021. But changes in consumption patterns will lead to a permanent loss of demand of three million bpd in this decade, compared to previous forecasts, according to J.P. Morgan.

Oil supplies, meanwhile, are expected to fall by five million barrels a day due to lack of investment in new production and the closure of some fields. Saudi Arabia has very low production costs compared to its competitors and has a high capacity technology, according to the bank's analysts in the report. "Saudi Arabia will gain in the fight for market share as production in non-OPEC countries and the United States weakens," Malek said.

The production of shale oil from United States, which grew sharply during the decade of 2010, it will barely increase this decade, rising only to 11 million bpd by 2030 from 10.9 million this year, according to the bank's forecast. Before the fall in oil prices, shale production was expected to reach 17 million barrels per day by the end of this decade.