IEA says oil price downturn ignores looming supply crunch

WEEKS of declining oil prices due to concerns over a possible recession clash with the outlook for scarce supply and robust demand later in the year, the International Energy Agency (IEA) said on Tuesday (May 16).

“The current market pessimism... stands in stark contrast to the tighter market balances we anticipate in the second half of the year, when demand is expected to eclipse supply by almost 2 million barrels per day (bpd).”

The Paris-based agency raised its forecast for global oil demand by 200,000 bpd to 102 million bpd, noting that China’s recovery after the lifting of Covid-19 curbs had surpassed expectations, with demand reaching a record 16 million bpd in March.

The world’s top oil importer is set to account for nearly 60 per cent of global demand growth in 2023, offsetting, along with India and the Middle East, sluggish demand in developed countries.

The United States and Brazil will lead modest growth in oil supply of 1.2 million bpd for the year, as Opec+ cuts agreed in April mean volumes from the producer group will fall 850,000 bpd from then through December, the IEA said. REUTERS