June 22, 2018
Oil output from Iran could fall by a quarter because of US sanctions, the International Energy Agency (IEA) says in its new analysis of the market in 2019.
Iranian output could be curbed next year by about 900,000 barrels a day, or about 23 percent, the IEA said. The agency stressed the estimate is a “scenario” rather than a forecast, based on the impact of previous sanctions.
Venezuela, where production has already collapsed to the lowest in decades as an economic crisis batters oil infrastructure, could see its output fall by a further 550,000 barrels a day, or 40 percent, the IEA said.
OPEC’s Middle East producers, led by the Saudis, are capable of filling that gap “in short order” with an additional 1.1 million barrels a day if they return to the record levels pumped in late 2016.
In theory, meeting the growth in world oil demand next year shouldn’t be a problem as US shale-oil production continues to rise.
Consumption will increase by 1.4 million barrels a day in 2019, the same pace as this year, while producers outside OPEC—primarily the US—will add 1.7 million a day, according to the IEA.
As a result, about 31.6 million barrels a day will be needed from OPEC in 2019, slightly less than the amount they pumped in May.
Yet as Iran and Venezuela decline, maintaining total supply levels will require extra effort from the Saudis and other Persian Gulf members.
Crude output from OPEC rose by 50,000 barrels per day (bpd) in May to 31.69 million bpd. The increase was due to higher production in Saudi Arabia, Iraq and Algeria, which helped offset a steep decline from Venezuela and Nigeria, the agency said.
The IEA also set out its oil forecast for the next year, with expectations that global demand will grow by 1.4 million bpd in 2019, driven largely by petrochemicals.
“Together with strong economic growth, the development of the petrochemical industry worldwide will underpin growth in oil demand,” the report said.
The Paris-based organization said non-OPEC supply growth for 2019 was forecast at around 1.7 million bpd compared to 2 million bpd this year. The US is likely to provide the most growth, accounting for about 75 percent of non-OPEC growth this year and next year.