IEA cuts oil demand forecast on Brexit impact

[PARIS] The IEA said Thursday it had cut its oil demand growth forecast for 2017 because of a weaker outlook for the world economy following Britain's vote to leave the European Union.

Global oil demand growth is now expected to slow to 1.2 million barrels per day in 2017 from 1.4 mb/d this year "due to a dimmer macroeconomic outlook", the International Energy Agency said in its monthly oil market report. The IEA had previously forecast growth of 1.3 mb/d for 2017.

The IEA said it was basing its projections on the International Monetary Fund's decision in July to cut its world economic growth forecast following Britain's vote to leave the EU the previous month.

"As a result the global outlook for 2016-17 has worsened," the IEA said, saying Britain itself would suffer the most, but the EU was also likely to be hit as trade prospects and confidence weakened.

At the same time oil oversupply, which has been weighing on the oil price in recent months, will disappear in the course of the second half of this year, the IEA said.

"Our balances show essentially no oversupply during the second half of the year," the IEA said.

AFP