PARIS: The world’s oil supply fell last month, the International Energy Agency said on Wednesday, amid rising global tensions as US sanctions on Iran tightened and Opec+ members produced less crude in line with their pact.
In its latest monthly report on the global oil market, the Paris-based IEA said that while geopolitics and industry disruptions were clouding the outlook it believes that the market balance is set to flip from surplus into deficit, a development that would favour efforts by oil producing nations to keep prices high.
Tensions have been mounting in recent days after the mysterious sabotage of several tankers in the Gulf and drone attacks claimed by Iran-aligned Yemen rebels shut down one of Saudi Arabia’s major oil pipelines.The IEA said Iranian crude oil output fell in April to 2.6 million barrels per day (mbd), the lowest level in over five years, and could tumble in May to levels not seen since the 1980s war with Iraq.
In a table with data from energy sector intelligence firm Kpler, Iranian exports are seen as plunging to roughly 0.5 mbd in May from around 1.4 mbd in April.
The supply disruptions, including those from crisis-hit Venezuela, come as Opec and its allies including Russia, often called Opec+, are pushing forward with their latest pact to restrain production.
After a production glut lead to prices dropping last year they agreed in December to trim production once again.
The IEA said the Opec+ nations produced 0.44mbd less than their target in April.
Nevertheless, it said: “there have been clear and, in the IEA’s view, very welcome signals from other producers that they will step in to replace Iran’s barrels, albeit gradually in response to requests from customers.” It noted that despite the supply uncertainty and a brief run up to $75 per barrel, prices for the global benchmark Brent crude are little changed from one month ago.