IEA: Global Oil Supply Outstripping Demand on Record U.S., Russia, Saudi Arabia Production
November 14 2018 - 3:29AM
Dow Jones News
By Christopher Alessi
LONDON--The United States, Russia and Saudi Arabia--the world's
three biggest oil producers--are churning out crude at record
levels, causing global supply to significantly outstrip demand, the
International Energy Agency said Wednesday.
In its closely watched monthly oil market report, the IEA said
oil output from the top producers is holding global supply steady,
at around 100.7 million barrels a day last month. That's 2.6
million barrels a day higher year-on-year.
Since May, global oil output has climbed by 1.8 million barrels
a day, with the U.S. providing 1 million barrels a day of growth
and Saudi Arabia and Russia adding 620,000 barrels a day and
445,000 barrels a day, respectively, the agency said.
The IEA, a Paris-based organization that advises governments and
corporations on energy trends, noted those gains were more than
offsetting output reductions from Iran due to U.S. sanctions and
supply outages in Venezuela.
In October, Saudi Arabia's oil supply rose month-on-month to
10.65 million barrels a day, while Russian crude and condensate
production soared to 11.4 million barrels a day, according to the
report. The agency said that preliminary data for the U.S. showed
output rose sharply last month, potentially rising to 11.6 million
barrels a day in early November--solidifying its spot ahead of
Russia as the world's largest producer crude.
In its annual World Energy Outlook report Tuesday, the IEA
predicted relentless shale growth in the U.S. could allow the
country to leap frog the world's other major producers, accounting
for roughly 75% of global oil growth by 2025.
The report comes as crude prices have plummeted more than 20%
since four-year highs reached at the start of October, falling into
bear-market territory. The slide was a response to rising supply,
weakening global economic growth that investors fear could weigh on
oil demand and a U.S. decision to grant waivers to major buyers of
Iranian crude following the enactment of sanctions on Iran's oil
industry at the start of the month.
The price drop prompted the Organization of the Petroleum
Exporting Countries--de-facto led by Saudi Arabia--and its allies
outside the cartel, including Russia, on Sunday to signal a
strategy shift that could include a joint production cut. The move
comes just months after the group's decision to begin ramping up
production after more than a year of holding back output.
Saudi Arabia on Sunday said that it would unilaterally slash its
net exports next month by around 500,000 barrels a day compared
with November levels.
The announcement initially helped crude prices to climb out of
the red Monday morning before again coming under pressure after
President Donald Trump put out a tweet calling on Saudi Arabia and
OPEC not to cut production. Prices were further weighed down
Tuesday after OPEC, in its monthly oil market report, lowered its
demand forecasts for this year and next.
Brent crude closed down 6.6%, at $65.47 a barrel, Tuesday.
The IEA on Wednesday kept its demand outlook largely unchanged
from last month's report, saying it expects demand to grow by 1.3
million barrels a day in 2018 and 1.4 million barrels a day in
2019.
Write to Christopher Alessi at christopher.alessi@wsj.com
(END) Dow Jones Newswires
November 14, 2018 04:14 ET (09:14 GMT)
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