IEA projects global oil growth despite OPEC cuts

The International Energy Agency (IEA) says very little extra oil will be needed from Organization of the Petroleum Exporting Countries (OPEC) this year since United States’ output offsets dropping exports from Iran and Venezuela. Washington’s decision to end the Iran sanctions waivers has allowed some importers to continue to buy Iranian crude added to the “confusing supply outlook.

The IEA estimates that in April OPEC states produced 440,000 barrels per day (bpd) less than the amount agreed in a production pact, with Saudi Arabia producing 500,000 bpd below its allocation. In its monthly report, the IEA states, “However, there have been clear and, in the IEA’s view, very welcome signals from other producers that they will step in to replace Iran’s barrels, albeit gradually in response to requests from customers. There is certainly scope for other producers to step up production.

The IEA said there was a “modest offset to supply worries from the demand side” as it expected growth in global oil demand to be 1.3 million bpd in 2019, or 90,000 bpd less than previously forecast, where 2018 demand growth had been estimated at 1.2 million bpd. Global oil demand would average 100.4 million bpd in 2019, according to the IEA, and higher output from producers OPEC, especially the United States in the second quarter, would keep the market well supplied.

American production of oil and condensates was forecast to rise by 1.7 million bpd in 2019. The IEA said crude oil would account for about 1.2 million bpd of the rise, although it said this would be lower than US crude oil output growth of 1.6 million bpd in 2018.

Global oil supply in April fell 300,000 bpd, with Canada, Kazakhstan, Azerbaijan, and Iran leading the losses. However, OPEC crude output rose by 60,000 bpd to 30.21 million bpd, on higher flows from Libya, Nigeria, and Iraq. The IEA said OPEC would be 30.9 million bpd in the second quarter of 2019 and would fall to 30.2 million bpd in the second half of the year.