By Adedapo Adesanya
The International Energy Agency (IEA) says oil markets are expected to face excess supplies by 2020 as a result of production boost despite weak demand growth globally.
This disclosure was made by the director for energy markets and security at the IEA, Kesiuke Sadamori at the Singapore International Energy Week.
“Overall, we will continue to see a well-supplied market in 2020,” he said in a interview with CNBC on Tuesday.
“Unless other things change, we will see a surplus probably, unless there is very strong demand growth recovery,” Sadamori revealed.
Oil, according to him, has been dealt a huge blow in recent times largely caused by global macroeconomic worries such as the unpredictable trade dynamics between the United States and China and the Brexit drama between the United Kingdom and the European Union.
However, its bid to tackle this, the Organisation of Petroleum Exporting Countries (OPEC) and its production allies, predominantly Russia, have implemented a cut by 1.2 million barrels of crude per day since January till March 2020 so it can lend its support to the market.
Sadamori, said that despite this significant measure, oil supplies were boosted this year by non-OPEC members such as the United States through shale oil production, adding that both Brazil and Norway will also produce more oil in 2020.
“Demand in 2019 has been weak, amid weak growth in the first half and India demand growth slower than expected,” he explained, noting that growth in the second half of 2019 is supported by a low base over the same period in 2018.
It will be recalled that in September, following the attacks by Yemen’s Houthi rebels on its oil processing facility, Saudi Arabia was forced to cut its oil production by half and this affected nearly 5.7 million barrels of crude production a day equivalent to 5 percent of the world’s daily oil production.
This development also drove up oil prices as high as 20 percent with the Brent Crude trading at $71 per barrel.
Sadamori commended Saudi Arabia’s ability to get back on its feet and commended that the recovery in supplies have been impressive and gave assurance of the stability of global oil markets.
According to the latest monthly report on the IEA website, oil demand is expected to grow at a “still solid” by 1.2 million barrels per day in 2020
Dipo Olowookere