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World oil supply risks being 'stretched to limit': IEA

AFP  |  Paris 

Rising global oil supply, driven by and Russia, may come under pressure as key producers face disruptions, the International Agency said today.

The IEA welcomed in its July report last month's agreement between the (OPEC) and to open the taps in order to bring prices down from multi-year highs.

But it pointed to supply disruptions in after a string of attacks on infrastructure.

It also highlighted continuing unrest in and a drop in Iranian exports after announced he was pulling the out of the landmark nuclear deal reached in 2015.

"The large number of disruptions reminds us of the pressure on global oil supply," the IEA said.

"This will become an even bigger issue as rising production from Gulf countries and Russia, welcome though it is, comes at the expense of the world's spare capacity cushion, which might be stretched to the limit."

The IEA report was published a day after both were sent into freefall by worries over a stronger dollar and the impact of the global trade war on demand.

The selling was also fanned by Libya's resumption Wednesday of from its eastern production heartland after a showdown between the war-torn country's rival authorities.

Even though Libyan exports have resumed, the IEA remains worried for the future.

"At the time of writing, the situation seemed to be improving, but we cannot know if stability will return," it said.

Also worrisome was the unabating unrest in Venezuela, which has sent output from the Latin American crashing in recent weeks. And while has yet to feel the full impact of renewed US sanctions, the IEA fears there could be "an even steeper reduction than the 1.2 million barrels per day seen during the previous round of sanctions".

Iraq, which is also chronically restive, does not have spare capacity either, leaving most of the job of hiking production to Saudi Arabia, the and

"We see no sign of higher production from elsewhere that might ease fears of market tightness," the IEA said.

and opened their taps ahead of a key meeting in June where and agreed to up output in order to bring prices down.

"Already in June the two key producers lifted output by more than 500,000 barrels per day between them," the IEA said.

"Saudi Arabia's sharp increase allowed it to overtake the US and reclaim its position as the world's second largest crude producer, and if it carries out its intention to produce at a record rate near 11 million barrels per day this month, it will challenge Russia," it added.

But they alone cannot carry the burden of keeping the stable. "Despite higher output in June, was down 700,000 barrels per day compared to a year ago, with lower by nearly 800,000 barrels per day, by 210,000 barrels per day and by 130,000 barrels per day," the IEA said.

"Even so, global was 1.25 million barrels per day higher than a year ago as rampant US output underpinned healthy non-OPEC growth.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, July 12 2018. 14:20 IST