London - World oil markets may take longer to tighten than expected due to a surge in Opec supply and a potential rise in Iranian exports, even as demand shows signs of strength, the International Energy Agency said on Wednesday.
The agency said in its monthly report it raised its forecast for global oil demand growth for 2015 further by 90 000 barrels per day (bpd) to 1.08 million bpd, bringing demand this year to an average of 93.60 million bpd.
Oil prices have halved from $115 a barrel in June 2014 due to ample supply in a decline that deepened after Opec chose to defend market share rather than cut output.
Global oil demand is rising faster than projected, but so is supply and the IEA rolled back its prediction of when the market would tighten.
“All in all, that suggests the market rebalancing may still be in its early stage,” the IEA said.
On the supply side, production in the Organisation of the Petroleum Exporting Countries surged to 31.02 million bpd in March, almost a two-year high, led by increases in Saudi Arabia, Iraq and Libya, the IEA said.
“Advances in talks on Tehran's nuclear programme not only call into question past working assumptions on future Iranian output, but may already have encouraged other producers to hike supply and stake out market share ahead of Iran's potential return,” the IEA said.
In previous reports, the IEA has predicted that the oil market would rebalance in the second half of 2015, as North American supply growth slows and lower prices help boost demand.
Oil consumption has proved stronger than expected in markets such as Europe, India and the United States, but the IEA was sceptical all the pockets of demand strength would last.
In contrast, the IEA said Opec's March production level may be sustained, if not rise further, in April.
The agency left its forecast of the demand for Opec crude in 2015 unchanged at 29.50 million bpd, pointing to a rising supply surplus if Opec keeps the same output.
Reuters