Global oil supplies take major hit amid US-Iran tensions
Iran Press TV
Wed May 15, 2019 06:50PM
The global oil market has experienced a major drop in supplies as a direct result of America's maximum pressure campaign against Iran, the International Energy Agency (IEA) says.
In its latest report, the IEA warned Wednesday that global supply dropped by 300,000 bpd in April, led by Iran, Azerbaijan, Kazakhstan and Canada.
The IEA also cut oil demand growth estimates for by 70,000 barrels per day (bpd) to 1.2 million bpd for 2018 and by 90,000 bpd to 1.3 million bpd for this year.
Production by countries outside the Organization for Petroleum Exporting Countries (OPEC) was forecast to grow by just 1.9 million bpd, versus 2.8 million bpd last year.
"The changes reflect lower-than-expected 2018 data in large consuming nations such as Egypt, India, Indonesia and Nigeria," the report said, adding early data for 2019 showed demand in Brazil, China and Japan was also below the agency's estimates.
The estimates come amid global worries over the continuation of US President Donald Trump's push to zero out Iran's oil exports, a plan he unveiled after abandoning the 2015 Iran nuclear deal over Tehran's missile program and growing regional influence.
The IEA report noted that demand fell by as much 300,000 barrels per day across the 36 members of the Organization for Economic Co-operation and Development (OECD) in April while among non-OECD countries, led by China, India and Russia, the figure grew by 930,000 bpd year on year.
According to IEA, Iran's production dropped by 130,000 bpd to 2.61 million bpd in April, right before the US revoked sanctions waivers on eight major Iranian oil buyers.
For perspective, Iran produced an average of 3.8 million bpd in 2017.
While the US counts on Saudi Arabia to make up for possible oil shortages after Iran sanctions, it is not clear whether Riyadh, which is still committed to an OPEC production cut agreement and a supply target of 10.3 million bpd, would actually decide to increase output when the organization meets to discuss oil production in late June.
The IEA said the US itself was also increasing production to compensate for the missing Iranian oil. It expects US oil production to increase by 1.7 million bpd this year, much lower than the record 2.2 million bpd in 2018.
It remains to be seen whether the oil industry in the United States would be able to step up production in order to balance the market, specially since Washington is in the middle of a raging trade war with China.
US Federal Reserve data released Wednesday showed that US factory production fell in April for a third time in four months, adding to signs of a growing weakness.
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