FXStreet (Mumbai) - OPEC forecast demand for its crude oil will decline to 2020. Removal of subsidies and implantation of price controls on petroleum products introduced by some governments in the face of low oil prices will likely restrict demand for oil. However, this time around the fall in demand estimated by OPEC is less than what it was previously expected. In its annual World Oil Outlook, OPEC said that its production will amount to 30.7 million barrels a day by 2020, which is 1.7 million barrels more than projected a year ago. The 30.7 million barrels of daily output from 12 of OPEC’s members in 2020 is about 300,000 a day less than required in 2015. On December 4th, at its meeting in Vienna, the OPEC increased its collective output ceiling to 31.5 million barrels per day (bpd) from the previous 30 million, completely disregarding the oil glut. OPEC had in November 2014 abandoned its earlier policy of controlling oil price and adopted the market share strategy championed by Saudi Arabia to drive out US shale producers from the market and remain competitive in when pitted against rival producers such as Russia. The strategy has definitely helped the organisation in beating competition with respect to maintain market share. The resulting oil price collapse has however led OPEC to incur huge financial costs. Recently, on December 21st, Brent crude futures touched an 11-year low of $36.04 a barrel. International Energy Agency said the oil price plunge since June 2014 that has reduced OPEC revenue by nearly $500 billion a year is the result of excessive pumping. Demand supply and oil price OPEC increased its global oil demand in 2020 estimate by 500,000 barrels a day to 97.4 million a day. It believes that by then, the requirement for fuel in emerging economies will surpass the demand in the industrialized OECD economies. Non-OPEC supply, OPEC feels will continue to grow by 2.8 million barrels a day till 20202 and this will include 800,000 barrels of additional U.S. shale oil. Non-OPEC supply in 2020 was however slashed by 1 million barrels a day to 60.2 million a day. OPEC is of the opinion that as instability in oil market will eventually lead to reductions in spending and drilling by energy companies. The oil production of the non-OPEC producers will decline in the decade of 2030 and 2040. Supply from non-OPEC producers will contract to 59.7 million barrels a day in the last two decades. Consequently demand for OPEC’s crude will increase to 40.7 million barrels a day, which OPEC believes will further expand its market share to 37 per cent. Prices are expected to rise to average $80 a barrel in nominal terms in 2020. In real terms it will likely increase $70.70 per barrel. This is a drop from previous year’s forecast. Last year OPEC had estimated nominal prices of $110 and real levels of $95.40. This translates into poor value of the output produced by OPEC. OPEC’s output in 2020 would be $218 billion less than what it had estimated a year ago. OPEC stressed $10 trillion will be required to be invested in the oil industry through to 2040 to develop the required supplies. Of the $10 trillion, $7.2 trillion need to be invested in oil exploration and production. OPEC feels that non-OPEC producers will be required to invest $250 billion a year. For more information, read our latest forex news.