The International Energy Agency (IEA) said an unexpected overproduction of Iranian oil has given the global market stability, offsetting recent negative activity in Canada and Nigeria. Aprils monthly report revealed output rose globally to 32.7 million barrels a day, boosted by Iran’s quick overproduction following the lift of sanctions earlier this year.
The agency is expecting a steep decline in global surplus by December, forcing the market to a “much-anticipated balance” following volatility. A lack of agreement on cuts caused oil prices to drop in April. Many producers have since bounced back after the troubling activity in Canada and Nigeria threatened further output.
The IEA said they are unsure of the affects on overall production from the Canadian wildfire in Fort McMurray. Shell had to close their Nigerian terminal and evacuate workers after extreme violence from militants demanding a larger share of its oil wealth. Chevron’s facility closed for similar reasons. They expressed concern about Libya’s output, declining due to split fighting factions, seriously affecting the Venezuelan economy.
Prices have flirted with recovery at $45, still lower than in recent years. The IEA said amidst global economic slowdowns, oil demand rose quicker than expected this first quarter. The 2016 forecasted oil demand of 1.2 million barrels per day has so far been preserved.
Article written by HEI contributor Marcela Abarca.
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