The current downturn in the global oil industry may prove to be more severe than in 1986, when business endured the deepest slump in 45 years, as OPEC keeps markets oversupplied, according to Morgan Stanley.
Increased production from Organization of Petroleum Exporting Countries is more than compensating for slowing growth in U.S. shale oil, the bank said in a report dated Tuesday. OPEC has boosted output by 1.5 million barrels a day since February, an amount roughly equal to a year’s increase in world demand, it said.
“The entire current oversupply can be attributed to OPEC supply growth over the past four months,” analysts including Martijn Rats and Haythem Rashed said in the report. “On current trajectory, this downturn could be worse than 1986” and may develop into the deepest decline for more than 45 years, they said.
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