Slowing global economic growth together with robust output from Opec producers will mean the oil market glut will persist through 2016, the world’s leading energy forecaster said on Tuesday. The International Energy Agency said in its closely watched monthly report a “marked slowdown” in oil demand growth looms as the stimulus from lower prices fades and economic activity weakens in countries dependent on commodity revenues.
At the same time, despite the oil price plunge curbing growth in US shale and other non-Opec production, additional barrels from Iran — alongside others within the producers’ group — will ensure the oil overhang remains into next year. A collapse in oil prices has supported strong oil demand growth this year. But the IEA anticipates oil demand growth will fall to 1.2m barrels a day in 2016 — to 95.7m b/d — down from initial estimates of 1.4m b/d. It is a sharp contrast to the stronger than expected 1.8m b/d in 2015, taking total demand to 94.5m b/d.
The IEA, which uses the International Monetary Fund’s growth assumptions for its oil demand estimates, said the global economic outlook was “more pessimistic”. The fund said earlier this month the world economy will for 2015 expand at its slowest pace since the global financial crisis.