PARIS, Crude oil demand growth forecasts for 2018 have been eased downwards by 100,000 barrels per day (b/d) because of a spike in oil prices linked with “geopolitics” but not “fundamentals,” the International Energy Agency (IEA) said on Wednesday.
In its latest monthly “Oil Market Report (OMR),” the agency now predicts that demand for crude oil will grow by 1.4 million barrels per day (mbpd) compared with forecasts a month ago that put growth at 1.5 mbpd.
The IEA says overall global demand this year should reach 99.2 mbpd, with strong growth recorded in the first quarter, but declining in pace in the second quarter because of higher oil prices.
The report noted that the world economy “is doing well” and there are no major fundamental problems, but the geopolitical tensions surrounding Iran and the question of sanctions on oil exports and the Iranian economy were fueling higher prices and some concerns.
But the OMR remarked that even with a sharp drop in Iranian exports from the 2.4 mbpd level currently, other producers currently employing output restraints would be able to pick up the slack.
In April, global oil supplies were stable at close to 98 mbpd, as “robust non-OPEC production offset lower OPEC production.” The non-OPEC output boost last month was particularly evident in the US, where supply was up 1.78 mbpd on year-earlier levels.
OPEC April production was pegged at 31.65 mbpd, down 130,000 b/d on the previous month, the IEA noted.
Compliance with the output restraint agreements of last November has now reached “a record” 172 percent, according to the OMR.
“The call on OPEC crude and stocks will average around 32.25 mbpd for the remainder of 2018, nearly 600,000 b/d higher than April output,” the report indicated.
At the same time, OECD commercial stocks declined “counter-seasonally” by 26.8 million barrels in March and inventory levels now stand just above 2.8 trillion barrels, the lowest level since March 2015.
Source: Kuwait News Agency