Global oil supply will outpace demand throughout 2019, as a "relentless" rise in output is swamps growth in consumption that is at risk from a slowing economy, the International Energy Agency (IEA) said on Wednesday.
In its monthly oil market report, the Paris-based IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month at 1.3 million barrels per day (bpd) and 1.4 million bpd, respectively, but cut its forecast for non-OECD (Organisation for Economic Co-operation and Development) demand growth, the engine of expansion in world oil consumption.
Inventories in industrialised nations have increased for four straight months and are set to jump by 2 million barrels a day next half if current output is maintained, the IEA said in its monthly report. The supply boom has seen prices tumble from a four-year high, offering respite to consumers in emerging markets worst affected by crude’s rally.
“Rising stocks should be welcomed as a form of insurance, rather than a threat,” the agency said Wednesday. “The response to the call by the IEA and others to increase production is a reminder that the oil industry works best when it works together.”
The IEA warned last month that high energy prices could present a risk to global economic growth. Benchmark crude futures soared in early October on fears that American sanctions against Iran would crimp supply. Yet a production push in Saudi Arabia, Russia and the U.S., as well as unexpected U.S. waivers for some buyers of Iranian crude, have provided the market with a buffer to potential supply shocks.
“Global oil supplies are growing rapidly, as record output from Saudi Arabia, Russia and the U.S. more than offsets declines from Iran and Venezuela,” the IEA said.