Global oil markets will remain oversupplied in 2016 as demand growth slows and Iranian exports begin to recover following lifted sanctions. That’s the message being delivered by the International Energy Agency.
Supplies will decline outside of OPEC in 2016 but demand growth will ease as analysts predicte a weaker outlook for the world economy.
The IEA predicts that Iran could swell the glut if restrictions on its sales are removed with the completion of a nuclear accord. It is also predicted that Iraq will replace the U.S. as the biggest source of new supplies as its output reaches record levels.
“The market may be off balance for a while longer,” the Paris-based adviser to 29 nations said in its monthly report. “A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels — should international sanctions be eased — are likely to keep the market oversupplied through 2016.”
According to Bloomberg, “Global oil demand growth will revert to long-term trend levels of 1.2 million barrels a day in 2016, down from 1.8 million this year, amid a softer economic outlook for oil producers such as Canada, Brazil, Venezuela, Russia and Saudi Arabia.”
Consumption is expected to fall 100,000 barrels below last month’s report, averaging 95.7 million barrels per day next year.