The International Energy Agency Friday warned of declining supply from OPEC members Libya and Iraq even as it revised higher its expectation of demand for oil from the Organization of Petroleum Exporting Countries.
In its latest monthly report, the IEA, which represents some of the world’s largest oil consumers, pegged demand for OPEC’s oil at 29.8 million barrels a day this year, an increase of 200,000 barrels a day from its previous forecast.
The latest demand estimate is still comfortably below the group’s average production level for the first half of the year of 30.6 million barrels a day, but the IEA warned that “continued supply outages in Iraq and Libya…may reduce the group’s output in coming months.”
Disruptions to production in Libya and Iraq already saw OPEC’s output fall by 170,000 barrels a day in July, despite an increase in Saudi Arabia’s production to the Kingdom’s highest in a year.
Protests in Libya saw the country’s production dwindle to just 400,000 barrels a day in the beginning of August compared with an already reduced output of 1 million barrels a day in July, according to the IEA’s figures.
Meanwhile, supply from Iraq fell below 3 million barrels a day for the first time in five months in July as a result of attacks on a major pipeline and is expected to plummet by around 500,000 barrels a day from September as a result of planned infrastructure work at its southern terminals.
However, the IEA added that strong supply growth from non-OPEC producers and easing demand from refineries in the coming months could mitigate supply issues elsewhere.
Refinery demand for crude oil has soared since the spring, rising 5.1 million barrels a day between April and July, more than twice the five-year average, the IEA said. However, it added that refinery runs are likely to ease from next month since output has risen faster than demand.
At the same time, non-OPEC production is expected to continue to grow strongly in the next six months. The IEA forecasts that substantial production growth in North America will help lift non-OPEC output by 1.4 million barrels a day in the second half of the year compared with a year earlier to reach 55.4 million barrels a day in the fourth quarter.
Source: Marketwatch
