Even though OPEC is trying to contain the oil glut, production is set to increase worldwide this year, the International Energy Agency said Thursday.
In its monthly report, the IEA said oil production could rise by 485,000 barrels a day around the world this year even as Saudi Arabia, Iraq and other major producers slash output. That’s compared to a global production drop of 790,000 barrels a day last year.
“Although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the U.S., will soon be on the rise again,” the IEA said.
The Paris-based group, which advises oil-importing countries, expects U.S. output to climb by 680,000 barrels a day this year, higher than its previous forecast. Meanwhile, it said, OPEC’s oil production fell by 365,000 barrels a day in March as Nigeria and Libya suffered outages.
The IEA also warned global energy demand growth could weak this year as Russia, India, Korea, the United States and some Middle Eastern countries slow.
It projected oil demand of 1.3 million barrels a day this year, down by about 100,000 barrels a day from its previous forecast. In the first quarter, global oil demand growth came in 20 percent lower than it had expected.
Still, the IEA said, global oil supply and demand appear to be rebalancing after more than two years of oversupply. Oil inventories in some non-OECD countries dropped by 300,000 barrels in the first quarter, though in OECD counties, stocks increased by 400,000 barrels.
OECD stocks are still 330 million barrels higher than the five-year average, but “it can be argued confidently that the market is already very close to balance,” the IEA said. “We have an interesting second half to come.”