The International Energy Agency (IEA) has said that though OPEC-led production cuts have helped to stabilise the oil market, crude prices will be kept in check in 2018 as demand grows at the same rate as supply from outside of the cartel.
The Paris-based organization disclosed this in a forecast released Thursday.
“It is this current outlook that might act as the ceiling for aspirations of higher oil prices,” IEA said in its September monthly report
It however noted that drastic supply curbs from OPEC countries and those outside of the cartel such as Russia must continue if the trend of shrinking excess oil stockpiles is to persist.
“A lot has been achieved towards stabilising the market, but to build on this success in 2018 will require continued discipline,” the energy body said.
Oil officials from OPEC and other producer countries are due to meet in Vienna next month when they will likely decide to extend a production cut agreement past March of 2018.
For 2017, global oil demand growth – which surpassed 2m barrels a day in the second quarter – remains unchanged at 1.6mb/d taking total consumption to 97.7m b/d. Next year consumption will grow by 1.4mb/d.
Global oil supply rose 90,000 b/d in September to 97.5m b/d as non-OPEC output, led by the US, ticked higher. This year oil from producers outside of the cartel will grow by 700,000 b/d, which will be followed by a 1.5m b/d increase in 2018.
OPEC output of almost 32.7m b/d was fairly unchanged in September as higher output from Libya and Iraq offset lower supply from Venezuela. The cartel’s total production is down 400,000 b/d from year ago levels.
“For next year, the crude and product markets look broadly balanced, assuming OPEC holds output steady at around current levels,” the IEA said.