Global crude oil demand to rise above million bpd next year
International Energy Agency (IEA) on Friday raised its estimate of world oil demand growth next year to 1.5 million barrels per day (bpd) from 1.4 million bpd, forecasting that much of this volume will come from non-OPEC oil output growth.
In its monthly oil market report, the IEA also raised its estimates of the “call” on OPEC, or the need for OPEC crude, by 300,000bpd in 2018 to 32.3 million bpd, and by 500,000bpd in 2019 to 31.9 million bpd.
However, following a strong first quarter this year it said world oil demand had grown by a mere 750,000bpd on the year in the second quarter, constrained by sharp price rises and currency depreciations, and highlighted “risks to the forecast from escalating trade disputes and rising prices if supply is constrained.”
European oil demand fell 120,000bpd on the year in the second quarter as the stimulus from low prices ended, it said. By contrast, China and India remain “on course to grow solidly this year,” the IEA said.
“Oil demand growth is expected to remain relatively subdued in Q3 2018 before rebounding in Q4 2018,” the report said.
On the supply side, the IEA raised its estimate for growth in non-OPEC oil output next year to 1.9 million b/d, from 1.8 million b/d in its previous report. Growth will be led by the US, with a 1.25 million b/d increase, Brazil with an extra 350,000 b/d, and Canada and Russia each increasing output by 210,000 b/d.
The IEA praised the global upstream oil industry for having managed to raise output while reducing its costs and improving its financial position, estimating the major oil companies had increased their oil and gas output by 11 percent since 2014, while cutting spending by 49 percent.
“Overall, the upstream industry is looking decidedly healthier on higher oil prices, sustained cost reductions and improved finances,” it said.
OPEC held its production steady in July at 32.18 million bpd, with Saudi Arabia producing 10.35 million bpd, the IEA said. Russia, OPEC’s partner in production cuts, increased its crude and condensate output by 150,000 b/d in July to 11.21 million b/d, the IEA said.
“Although OPEC is producing at the highest rate since February, overall supply in July was down 930,000 b/d year on year due to sharply lower output from Venezuela, Libya and Angola,” it said.
Iran’s output was the lowest since April last year at 3.75 million b/d as Europe reduced its Iranian crude imports and South Korea completely stopped its Iranian imports. But Iranian shipments to Asia overall crept up to 1.65 million b/d, and shipments to India reached a record 770,000 b/d, the IEA said.
It said second-largest producer Iraq had raised its production by 200,000 b/d in July to 4.56 million b/d, with exports from the south of the country at a record high as Basra Light exports hit 3.54 million b/d, offset by subdued volumes through the Kurdistan pipeline to Turkey of 330,000 b/d.
The IEA also said oil stocks in the OECD countries had reduced to 32 million barrels below the five-year average in June, falling seasonally by 7.2 million barrels on the month to 2.82 billion barrels.