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 (IEA) said on May 15.
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 [bbl/d] less than the amount agreed in a production pact, with Saudi Arabia producing 500,000 bbl/d 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 bbl/d in 2019, or 90,000 bbl/d less than previously forecast. It said 2018 demand growth had been estimated at 1.2 million bbl/d.
Global oil demand would average 100.4 million bbl/d in 2019, exceeding 100 million bbl/d for the first time, according to the IEA. It also said higher output from producers outside OPEC, 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 bbl/d in 2019. Crude oil would account for about 1.2 million bbl/d 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 bbl/d 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 bbl/d, the IEA said, with Canada, Kazakhstan, Azerbaijan and Iran leading the losses. But OPEC crude output rose by 60,000 bbl/d to 30.21 million bbl/d, on higher flows from Libya, Nigeria and Iraq, the IEA added.
The IEA said the call on OPEC would be 30.9 million bbl/d in second-quarter 2019 and would fall to 30.2 million bbl/d in the second half of the year.
Exxon Mobil Corp. has evacuated dozens of its foreign staff from the West Qurna 1 oil field, but work is still going on, according to multiple reports.
The crude oil production decline was the second consecutive slip, following a fall in January, according to data from the U.S. Energy Information Administration.
OPEC oil output hit a four-year low in April due to further involuntary declines in sanctions-hit Iran and Venezuela and output restraint by top exporter Saudi Arabia.