The world will require very little extra oil from OPEC this year as booming U.S. output will offset falling exports from Iran and Venezuela, the International Energy Agency said on Wednesday.
The IEA, which coordinates the energy policies of industrial nations, said Washington’s decision to end sanctions waivers that had allowed some importers to continue to buying Iranian crude added to the “confusing supply outlook.”
“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,” the Paris-based IEA said in its monthly report.
“There is certainly scope for other producers to step up production,” it said, adding that it estimated OPEC states in April had produced about 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.
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. It said 2018 demand growth had been estimated at 1.2 million bpd.
It said global oil demand would average 100.4 million bpd in 2019, exceeding 100 million bpd for the first time.
GRAPHIC: Demand/Supply Balance until 2Q19 – tmsnrt.rs/2W2lmlj
It also said higher output from producers outside the Organization of the Petroleum Exporting Countries, especially the United States in the second quarter, would keep the market well supplied.
U.S. production of oil and condensates was forecast to rise by 1.7 million bpd in 2019. Crude oil would account for about 1.2 million bpd of that rise, the IEA said, although it added that said this would be lower than U.S. crude oil output growth of 1.6 million bpd in 2018.
The IEA said reduced rig counts and maintenance in the Gulf of Mexico had affected U.S. output in the first half of the year, but an uptick in drilling permits and hydraulic fracturing, or fracking, early in the year would lift output.
Global oil supply in April fell 300,000 bpd, the IEA said, with Canada, Kazakhstan, Azerbaijan and Iran leading the losses. But OPEC crude output rose by 60,000 bpd to 30.21 million bpd, on higher flows from Libya, Nigeria and Iraq, it added.
The IEA said the call on 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.