Global oil output will exceed demand until late 2017, the head of the International Energy Agency said before major producing nations gather for talks.
“We don’t see the oil market re-balancing until late 2017” provided there’s no “major intervention,” IEA executive director Fatih Birol said yesterday in an interview with Bloomberg Television in Algiers.
The Paris-based agency is extending its bearish view after saying on September 13 that oil supply will outpace demand “at least through the first half of next year.”
Opec members will hold informal discussions in the Algerian capital today as they seek to buoy prices following two years of decline amid brimming global stockpiles.
Oil-demand growth has been weaker than expected, Birol said. The IEA this month cut its forecast for consumption growth in 2016 and 2017, citing a “marked slowdown” in India and China. The agency, which advises industrialised countries on energy policy, projected demand growth of 1.3mn bpd in 2016, down from 1.6mn a day in 2015. Its prediction slips to 1.2mn a day next year.
The Organisation of Petroleum Exporting Countries, which produces roughly 40% of the world’s oil, is unlikely to take a formal decision on supply in Algiers, postponing it until the group’s next official meeting in two months. An Opec delegate familiar with the oil policy of Saudi Arabia said the kingdom sees the talks just as a consultation, a view echoed by Iran.
Saudi Arabia has offered to reduce its production to the level of last January, according to Algeria’s energy minister. That would remove about half the kingdom’s 1mn-bpd increase in output since it led Opec’s push to defend market share in 2014. While Iran was said to have rejected the Saudi proposal, the chance of the group eventually taking action is growing.
“There definitely seems to be a bigger push towards achieving some coordination amongst members this time around, so even if there is no concrete deal in Algeria, this isn’t over yet,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd in London. “The door remains open for further negotiations and a possible deal at the November 30 Opec meeting in Vienna.”
Opec’s discussions this week will take place after a meeting of the International Energy Forum.