IEA: Rebalancing of Global Oil Market to Be Gradual

Date: 19 January 2019 - 21:36

News ID: ۶۲۲۲۶

VIENNA (Dispatches) - Despite the signing of a new Vienna Agreement, the journey to a balanced global oil market will take time and is more likely to be a marathon than a sprint, according to the International Energy Agency’s first Oil Market Report in 2019.
On the supply side, IEA said, "While Saudi Arabia is determined to protect its price aspirations by delivering substantial production cuts, there is less clarity with regard to its Russian partner.”
Data show that Russia increased crude oil production in December to a new record near 11.5 million b/d and it is unclear when it will cut and by how much. Other nonmembers of the Organization of Petroleum Exporting Countries joining in the output deal saw higher output, including Mexico.
There are also signs elsewhere that market rebalancing will be gradual, IEA said. The trajectory of Iran’s production and exports remains important. In December, total Iranian exports increased to more than 1.3 million b/d. With U.S. waivers allowing Iran’s major customers to buy higher volumes than was previously thought, more oil will remain in the market in the early part of this year.
Venezuela has seen the collapse of its oil industry slow during the second half of 2018 with production falling recently by about 10,000 b/d each month rather than by the 40,000 b/d we saw earlier in the year.
The level of output from the U.S.—the world’s biggest liquids producer—will once again be a major factor in 2019. Total liquids production rose 2.1 million b/d in 2018. For this year, IEA has left unchanged for now its forecast for growth of 1.3 million b/d.
"While the other two giants voluntarily cut output, the U.S., already the biggest liquids supplier, will reinforce its leadership as the world’s No. 1 crude producer. By the middle of the year, U.S. crude output will probably be more than the capacity of either Saudi Arabia or Russia,” IEA said.
The oil demand picture also is mixed. Falling prices in the last quarter of 2018 helped consumers, and there are signs that trade tensions might be easing. In many developing countries, lower international oil prices coincide with a weaker dollar as the likelihood of higher U.S. interest rates fades for now. However, "the mood music in the global economy is not very cheerful,” IEA said. Confidence is weakening in several major economies.