The International Energy Agency has left its short-term global oil demand growth projections steady for yet another month but warned that ongoing unrest in Venezuela could present "challenges" for the world oil market.
In its latest "Oil Market Report" released March 15, the Paris-based agency said global demand growth is still pegged at 1.3 million barrels per day for 2018 and 1.4 million bbl/d for this year.
While consumption growth is little changed in the near-term, due in part to slower demand from China, it is still anticipated to increase by an annual average of 1.2 million bbl/d to 2024.
In 2018, the U.S. was the leader in not only crude oil production growth, but for the first time in two decades, was top in demand growth, surpassing China, IEA Executive Director Fatih Birol said March 11 during CERAWeek by IHS Markit in Houston after introducing findings of the agency's Oil 2019 report.
Due to the shale revolution, the U.S. will continue to dominate supply growth in the medium term, the IEA report said.
"Following the unprecedented expansion seen in 2018, when total liquids production increased by a record 2.2 million barrels per day the United States will account for 70% of the increase in global production capacity until 2024, adding a total of 4 [million bbl/d]," the monthly report said.
Non-OPEC supply growth was revised upward from 2.7 million bbl/d in the agency's prior report to 2.8 million bbl/d.
"Important contributions will also come from other non-OPEC countries, including Brazil, Canada, a resurgent Norway, and newcomer Guyana, which together add another 2.6 [million bbl/d] in the next five years," according to the March 15 report.
OPEC could balance the market amid Venezuela unrest
Global oil supply fell by 1.4 million bbl/d in January to 99.8 million bbl/d as OPEC cuts deepened and amid U.S. sanctions against Iran and Venezuela's state-run oil company. Crude supply from Venezuela dropped 100,000 bbl/d in February to near 1.2 million bbl/d. The IEA said ongoing unrest in Venezuela, which now includes nationwide power outages, could present "challenges" for the world oil market.
However, OPEC members have about 2.8 million bbl/d of spare production capacity. "Much of this spare capacity is composed of crude oil similar in quality to Venezuela's exports. Therefore, in the event of a major loss of supply from Venezuela, the potential means of avoiding serious disruption to the oil market is theoretically at hand," the monthly report said.
OPEC crude oil output was down by 240,000 bbl/d in February to 30.68 million bbl/d amid the losses from Venezuela and lower output from Saudi Arabia and Iraq. OPEC compliance was 94% in February.
In December 2018, OPEC and some non-OPEC oil members agreed to trim production by 800,000 bbl/d and 400,000 bbl/d, respectively, to address a growing supply overhang and stabilize prices as Brent crude oil swung from $86/bbl in early October 2018 to $58/bbl by November 2018.
At the end of January, the Organisation for Economic Co-operation and Development commercial oil stocks rose 8.6 million barrels on the month to their highest level since November 2017, the IEA monthly report said.