The rich countries’ energy watchdog warned on Tuesday of growing tightness in oil supplies in the second half of the year, and urged the Organisation of the Petrolem Exporting Countries to raise its output.
David Fyfe, an analyst at the IEA, said: “We would very much hope that Opec production is at its seasonal low at the moment… We definitely do need more crude oil.”
The IEA now expects demand for oil to rise by 1.7m barrels a day this year compared to last year – an increase of about 2 per cent – and non-Opec oil supply to rise by just 900,000 b/d. That rise in demand is 167,000 b/d more than the IEA had previously estimated, while the rise in non-Opec supply is 97,000 b/d less.
The report estimated that world oil stocks could drop by 1m-1.5m barrels a day in the third quarter, which it said “would push forward stock cover down towards the low levels seen when prices accelerated higher in 2004. That is, by itself, a concern.”
Opec officials have played down the possibility of any increase in production before the next ministerial meeting in Vienna on September 11.
However, speaking to the FT at the beginning of June, Abdalla El-Badri, Opec’s secretary-general, left open the possibility of raising production later in the year, saying the decision would depend on what happened to oil stocks.
The IEA report, though viewed by analysts as supporting the price of oil, failed to prevent it falling during the morning. At mid-day in London, Brent crude was down 41 cents at $69.15 a barrel