PARIS: An increase in output should help cushion oil markets seized by tension over a possible conflict in the Middle East, the IEA said yesterday, with emerging market nations facing difficulties due to their falling currencies.
The slow pace of the global economy led the International Energy Agency to keep its forecast for oil demand growth for this year unchanged, while rising it slightly in 2014.
However a dip in supply by 770,000 barrels per day plus concerns a US strike on Syria over its suspected use of chemical weapons triggering a wider conflict sent oil prices up sharply. The price of Brent crude has since dipped from a peak around $117 hit last month on possibilities of a diplomatic resolution to the standoff.
“But, while the geopolitical storms in the Middle East and North Africa have yet to pass, easing fundamentals look set to lessen the pressure somewhat on market participants — at least for the next few months,” said the IEA.
“Global crude supply — notwithstanding the Libyan problems — looks set for an upward jump in 4Q13, thanks to a heady mix of seasonal, cyclical, political and structural factors,” added IEA.
The rise in oil prices was also supported by production of Libyan crude, which is a top-rated blend that is highly-prized by European refineries, fell from 1m b/d in July to just 150,000 in early September due to labour disputes, civil unrest and political discord.
The shortfall was partially made up by Saudi Arabia increasing production to 10.19m b/d in August, its highest level in 32 years. Excluding the threat of a Middle East conflict the IEA said the outlook for growth of non-Opec supplies is generous for the remainder of the year, edging up its supply forecast to 55.5m b/d in the fourth quarter.
AFP
