London: Rising oil supply from non-Opec countries may cover global demand growth for the next two years, according to the International Energy Agency. That could force Opec to stick to output cuts for much longer than planned.
“We’re seeing a significant amount of non-Opec oil coming to the markets,” IEA Executive Director Fatih Birol said Wednesday, citing rising output from North America, Brazil and Mexico.
The forecast may thwart any efforts by the Organisation of Petroleum Exporting Countries and its partners to unwind the production curbs they’ve been making since the start of last year. If supplies outside the group are enough to satisfy the increases in consumption, the cartel would need to keep output capped at current levels for the rest of the decade.
Although countries involved in the production cuts are considering how to extend their partnership in coming years, keeping output constrained could be a challenge as the deal has shown some signs of strain. Russian oil companies, eager to press on with new projects, have pushed for a swift end to the curbs, while Opec members like Iraq, Iran and Libya are keen to expand capacity after years of lost revenues amid sanctions and conflict.
New supplies outside Opec may cover demand growth in 2019 and 2020, Birol said in a Bloomberg Television interview in London. The challenge will come in a few years’ time, when high demand, maturing fields and under-investment in new supply could combine to destabilise the market, he said.
—Bloomberg
