IEA: Oil market is regaining balance

OPEC production in March decreased by 550 thousand bpd to 30.1 million bpd, including due to a decrease in Saudi Arabia’s supply to a minimum of two years (a month even minus 320 thousand bpd). Also, production in Venezuela fell to 870 thousand bpd against 1.14 million bpd in February (just like Iran and Libya, the country is exempt from the execution of the deal). In general, level of execution of the transaction by the countries of the cartel reached 153%, including Saudi Arabia - by 252%. So far, Iraq has reduced production by only 80% of the promised, Nigeria - by 19%. Non-OPEC members have implemented a total reduction of 64%, including deliveries in Russia in the past month decreased by 40 thousand bpd to 11.63 million bpd, which by 52% corresponds to the deal’s goal. Thus, in general, the terms of the agreement were exceeded by 124% as production was 290 thousand bpd below the agreed level of 44.3 million bpd.

If all manufacturers fully meet their commitments, the market will be balanced in the second quarter of 2019, and the potential demand for cartel oil will increase to 30.9 million bpd, the IEA expects. It should be noted that the next meeting on the deal is scheduled for April 17–18, where participants will discuss whether to extend the agreement in June. The increase in production in countries outside the cartel has also slowed significantly compared with the end of last year (from 3.4 to 2.4 million bpd year to year). In total, these factors resulted in an increase in the price of oil from $ 50 a barrel to Brent in December to $ 70. No less important will be the increase in demand, but it is still difficult to predict its behavior, the agency concludes.

source: iea.org