A recent report by the International Energy Agency (IEA) has forecasts global oil demand rising at its fastest rate in five years in 2015. Despite this rise in demand, lower oil prices and spending cuts will continue.
Global oil demand this year will rise at more than twice the pace last year as low oil prices catalyze consumption in the US and economies recover, the agency noted.
Global oil demand will expand by the fastest pace in five years, as economic growth solidifies and consumers respond to lower oil prices,” the agency said. IEA expects global demand to reach 1.6 M/bpd in 2015 to average 94.2 M/bpd, the IEA said. The agency also raised its estimate for oil consumption in 2016, forecasting growth of 1.4 M/bpd to total 95.6 M/bpd – representing an increase of 400,000 bpd from the previous report.
Oil supply also continues to grow at “breakneck speed” – currently standing at 2.7 M/bpd above a year earlier. OPEC supply, and particularly “muscular pumping” from Saudi Arabia and Iraq) would continue to increase, to 30.8 M/bpd in 2016, up 1.4 M/bpd on this year “due to a stronger demand outlook and stalling non-OPEC supply growth.”
OPEC maintained production near a three-year high at 31.79 M/bpd last month. IEA increased estimates for the amount of oil needed from OPEC next year by 600,000 bpd to 30.8 M/bpd. This is still approximately 1 M/bpd lower than current production.
Significantly, Iran could raise output to 3.6 M/bpd from roughly 2.9 million currently “within months” of sanctions being rescinded, the IEA said.