OPEC needs to raise oil output significantly in the second half of 2014 to meet global demand as China builds its strategic reserves and stocks in industrialised countries remain low, the International Energy Agency said on Thursday.
World oil demand growth will be slightly higher than previously thought in 2014, at 1.32 million barrels per day (bpd), the IEA said in its monthly Oil Market Report.
At the same time, political turmoil in producers such as South Sudan and Colombia and technical glitches at Kazakhstan’s Kashagan field and elsewhere saw the West’s energy watchdog cut its estimate for non-OPEC supply growth by 100,000 bpd to 1.5 million bpd for the year.
That will result in demand for OPEC crude rising to about 30 million bpd this year, the IEA said, a 200,000 bpd increase on its previous estimate.
The Organisation of the Petroleum Exporting Countries (OPEC) produced 29.9 million bpd in April, it said, a monthly increase of 405,000 bpd led by Iraq, Saudi Arabia, Kuwait and Algeria.
“Crude prices remain elevated and forecast balances call for a significant rise in OPEC production from current levels for the second half of the year,” the report said.
“While OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the aboveground hurdles that have plagued some of its member countries lately.”
Turmoil in Libya and other members of OPEC has hampered crude oil supplies in recent years. However, the IEA said OPEC production had been close to its output target of 30 million bpd in recent months.
The agency, which advises the United States and other industrialised countries on oil policy, said OPEC was expected to maintain its output target at 30 million bpd when it meets in Vienna next month.
The IEA said a surge in Chinese imports suggested that the world’s number two oil consumer was building its strategic reserves of oil, which could tighten global markets.
OECD commercial stocks rose by 52.1 million barrels in April, trimming their deficit to the five year average, it said.
“Despite recent builds, OECD stocks remain tight by historical standards,” the report said.