The oil market will flip into a modest deficit from the second quarter of this year, with OPEC possessing a hefty supply cushion to prevent any price rally in case of possible supply disruptions, the International Energy Agency (IEA) said on March 15.

The IEA, which coordinates the energy policies of industrialized nations, kept its forecast of growth in global oil demand this year unchanged at 1.4%, or 1.4 million barrels per day (MMbbl/d).

Solid growth in non-OPEC oil output led by the United States should ensure demand is met, the IEA said.

The Paris-based IEA said the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 MMbbl/d.

“At the same time, (OPEC) production cuts have increased the spare capacity cushion. This is especially important now as economic sentiment is becoming more pessimistic and the global economy could be entering a vulnerable period,” the IEA added.

The agency said it was particularly concerned about a possible further decline in production in Venezuela, where output has stabilized at 1.2 MMbbl/d in recent months.

It said the degradation of the Venezuelan power system, vital for oil output, was such that it could not be sure whether fixes were durable.

However, in the event of a major loss of Venezuelan supply, OPEC had about 2.8 MMbbl/d of effective spare capacity, the IEA said.

The agency also said rising U.S. output was providing comfort to world markets.

In 2018, the U.S. contributed 79% of the 2.8 MMbbl/d of non-OPEC output growth.

“The relentless pace continues into 2019, when U.S. supply is expected to expand by 1.5 MMbbl/d and account for 83% of non-OPEC growth of 1.8 MMbbl/d,” it said.

“What is game changing is that the U.S. in 2021 will become a net oil exporter on an annual average basis.”

With production in Canada also increasing, and most of its exports moving to U.S. refineries, more U.S. crude should be available for export.

In 2019, U.S. seaborne oil trade will move into surplus with net exports rising to nearly 4 MMbbl/d by 2024.