The growth in oil demand in the second quarter of 2016, exceeding the growth of supply, which significantly reduced the imbalance in the global oil market, the report by the International energy Agency (IEA).
According to estimates of experts, the total oil demand in the second quarter grew at an annual rate of 1.4 million barrels a day. This daily export volume of oil grew by only 600 thousand barrels, and world oil production and is decreased by 750 thousand barrels per day — developing mining countries in the Middle East could not offset losses from the decline in production outside OPEC.
The approach of the oil market to a state of balance has led to increased prices, which rose in June above $52 per barrel of Brent. However, the IEA warned that the newly established structure of prices threatens the high level of commercial reserves accumulated in the storage of crude oil and petroleum products.
“There is a danger that if the demand will be stronger than we now expected, inventory levels could grow even bigger and threaten the entire structure of prices”, — quotes the report of the IEA edition of the Wall Street Journal.
According to the IEA, in may, commercial oil stocks in countries of the Organization for economic cooperation and development (OECD) grew by 13.5 million barrels to a record high of 3,074 billion barrels. According to preliminary estimates, in June stocks in the OECD countries increased by 900 thousand barrels, while volumes of oil aboard tankers and floating storage peaked in 2009.
In the report, the IEA emphasized the decline in global refining. In may (compared with April), they decreased by almost 1 million barrels a day. The result for the second quarter for the first time in three years was recorded decrease in volume of oil refining in comparison with the previous year.
IEA experts particularly noted the sharp increase in oil production in the Middle East. Saudi Arabia in June 2016 increased daily production to close to a record level of 10.45 million barrels, while Iran brought it to 3.66 million barrels. The combined efforts of the middle Eastern countries compensated for the decline in production in Nigeria and some other OPEC countries, which allowed the total production of the cartel to exceed last year’s level by 0.5 million barrels per day.
Previously Executive Director of the IEA, Fatih Birol warned about the growing dependence of the world oil market from the supply from the Middle East. According to the IEA, the share of Saudi Arabia and other middle East countries now account for 34% of all deliveries to the world market, which is the highest figure since 1975. For comparison, in 1985, after the beginning of intensive exploration by Europeans of the fields in the North sea the proportion of middle East oil on the world market fell to 19%.
“Middle East countries are reminded that they are the main source of cheap oil. The faster the demand will increase, the more [consumers] will be [here] to import,” said Birol, calling for politicians from the developed countries to think about introducing more stringent measures for improving the fuel efficiency.