A re-balancing of world oil markets could occur in the first half of next year if production cuts by OPEC and other producers are implemented, International Energy Agency (IEA) chief Fatih Birol said on Dec. 13.
Birol told a conference in Prague that higher oil prices would weaken global demand.
In its monthly oil market report, the IEA said revisions to its estimate of Chinese and Russian consumption had prompted it to raise its forecast for global oil demand growth this year by 120,000 barrels per day (bpd) to 1.4 million bpd, and to lift its forecast for 2017 by 110,000 bpd to 1.3 million bpd.
The Organization of the Petroleum Exporting Countries agreed on Nov. 30 to cut output by 1.2 million bpd to 32.5 million bpd for the first six months of 2017, together with another 558,000 bpd in cuts from the likes of Russia, Oman and Mexico.
The IEA underlined the market could show a shortfall of 600,000 bpd early next year if all parties complied with the agreement
“If OPEC and its non-OPEC partners stick to their pledges, global inventories could start to draw in the first half of 2017,” the IEA said, adding that this was not its own forecast, but was based on the agreement.
“The deal is for six months and we should allow time for it to be implemented before re-assessing our market outlook. Success means the reinforcement of prices and revenue stability for producers after two difficult years; failure risks starting a fourth year of stock builds and a possible return to lower prices,” the Paris-based organization said.