The International Energy Agency is predicting a gap in global oil supply by late 2019 if the Organization of Petroleum Exporting Countries (OPEC) can’t keep up with growing demand. But it’s hedging its bets on the economic factors behind the forecast.
The IEA maintains that demand will exceed 100 million barrels per day by next April, then increase by 1.4% over the course of the year. “A solid economic background and an assumption of more stable prices are key factors,” the Paris-based agency states in its monthly report.
But “risks include possibly higher prices and trade disruptions,” the IEA acknowledges, citing Donald Trump’s mounting trade war with Canada and the European Union as the “main risk” to the IEA’s demand forecast.
“The risks associated with escalating retaliations are not negligible,” the report states. “A prolonged slowdown in trade would negatively affect world GDP growth and oil demand, as a significant part of oil consumption is linked to trade activities.”
The IEA also sees “the possibility of a downward revision to our economic assumptions in the next few months,” with the world economy “feeling some pain from higher oil prices.”
The Thomson Reuters report goes over some of the market dynamics between OPEC and non-OPEC fossil producers that will be in play when OPEC ministers meet in Vienna this week.
But U.S. shale production still only accounts for a little over 5 million barrels per day, or a little more than 5 percent of total oil production worldwide. By way of comparison, conventional oil production accounts for 69 million barrels per day.
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