International energy bodies have offered differing positions on the expected impact of sanctions and production outages in Iran, Venezuela, and Libya on oil capacity.
While the Organisation for Petroleum Exporting Countries (OPEC) said rising capacity from its rivals will easily meet the global demand, International Energy Agency’s monthly report has projected that capacity could be “stretched to the limit.”
OPEC’s report on Wednesday projected growth in demand for oil in 2019 would slow from 1.65 million barrels a day this year to just 1.45 million barrels per day. This equals a total rise to 100.3 million barrels per day in demand that would be easily covered by an expected increase in non-OPEC supply of 2.1 million barrels per day.
“Following the robust growth seen this year, oil market developments are expected to slightly moderate in 2019, with the world economy and global oil demand forecasts to grow slightly less,” OPEC said in the report. “If the world economy performs better than expected, leading to higher growth in crude oil demand, Opec will continue to have sufficient supply to support oil market stability,” the oil cartel said.
The report also noted that group production increased by 173,000 barrels per day to 32.33 million barrels per day in June, with Saudi Arabia making the largest monthly contribution increase at 405,000 barrels per day, and Libya’s input plummeting 254,300 barrels per day.
The IEA’s report on Thursday projected growth in demand of 1.4 million barrels per day in 2019, to 100.5 million barrels per day, but said the market will grow tighter as supply shocks test the major producers.
“We see no sign of higher production from elsewhere that might ease fears of market tightness. Indeed, our overall growth outlook for non-OPEC production in 2018 has been reduced slightly to 1.97 million barrels per day,” IEA wrote.
The Paris-based agency pointed to declining Iranian exports, which have already fallen as much as 50 percent as US sanctions deter buyers. It said Venezuela’s falling total output capacity could sink below one million barrels a day by the end of the year, bringing its overall loss in 2018 to more than 40 percent, year-on-year.
Saudi Arabia’s spare production capacity could dwindle to “an unprecedented level below 1 million barrels a day,” if the Saudis raise production to a record 11 million barrels a day next month, as they’ve indicated they might, the IEA predicted.
Frontpage January 15, 2019