The Paris-based International Energy Agency (IEA) has said in its latest monthly report that it expects oil markets to show a supply surplus in 2020 in the absence of a strong recovery in demand. It also revised down its demand-growth expectations by 100,000 barrels per day (bpd) for both this year and the next.
Keisuke Sadamori, Director of Energy Markets and Security at the IEA, spoke to CNBC at the Singapore International Energy Week:
“Overall, we will continue to see a well-supplied market in 2020. Unless other things change, we will see a surplus probably, unless there is very strong demand growth recovery.”
He added that global macroeconomic anxieties were holding back the oil markets, such as the UK’s impending departure from the European Union and the trade war between the US and China. Despite this, the IEA’s report states it still expects demand to grow by a respectable 1.2 million bpd next year.
Despite efforts by OPEC and its partners to limit supply by cutting 1.2 million bpd in production since January, other countries bridged the gap with increased production. This notably includes the US, where shales producers like ExxonMobil, the owner of the Mobil lubricant brand, have steadily raised production over recent years. The owner of Petro-Canada, Suncor Energy, has also been refining synthetic crude from oil sands.
At the same time, demand has been relatively weak in 2019. Even the drone strikes against some of Saudi Arabia’s oil-processing facilities failed to shake markets thanks to rapid action in restoring production.