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IEA: Global market is getting accustomed to expensive oil


10/15/2018

Weak global growth, trade disputes and high oil prices will limit growth in demand for fuel raw materials to 1.3 million barrels per day in 2018 and 1.4 million bpd in the year 2019. In both cases, this is 110,000 bpd less than expected in September, a new report of the International Energy Agency (IEA) states. Nevertheless, both demand and oil production are at record levels and their peak is not yet visible, the agency states. “The period of expensive energy began again in the market - and this is a threat to the global economy,” the report says. The authors also point out that a record low share of free capacity to increase supplies (2%) will also support oil prices.



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Oil production almost did not change in September, remaining at the level of about 100 million bpd (this is 2.6 million bpd more than a year ago). OPEC countries increased deliveries by 100 thousand bpd, to a maximum over the last year - 32.78 million bpd, and non-cartel countries reduced production by 140 thousand bpd. Since May, when Washington announced its intention to reintroduce sanctions against Iran, OPEC shipments in total increased by 735 thousand bpd. The main increase was provided by the countries of the Persian Gulf (in particular, Saudi Arabia increased production by 500 thousand bpd) as well as Nigeria and Libya, which allowed to replace the drop in shipments from Venezuela and Iran. Without these countries, but with other parties to the OPEC + transaction, the increase amounted to 1.6 million bpd, including Russia added 400 thousand bpd. For comparison, in the United States over the same period, the increase amounted to 390 thousand bpd. Total production outside of OPEC could grow by 2.2 million bpd this year, and by 1.8 million bpd in 2019, the agency expects.

“So far, the volume of supply on the oil market looks adequate. However, given that Iran’s exports are likely to decline significantly more than the current 800,000 bpd, a more substantial increase in supply may be necessary,” the IEA said. The agency also pointed out that Iran, Iraq, Libya, Nigeria and Venezuela could be a significant source of production growth after the shale revolution in the United States and increasing deliveries from Brazil and Canada, but demand will be supported by an increase in refining volumes, mainly due to higher consumption of oil and gas. 

source: iea.org