World oil demand will rise less than previously thought in 2014, the International Energy Agency said yesterday, due to a lower outlook for Russia’s economic growth following its annexation of Crimea.
The agency, which advises industrial countries on oil policy, also reduced its forecast for non-Opec supply this year, which will increase the need for crude from the Organisation of the Petroleum Exporting Countries.
Global demand growth will average 1.29mn barrels per day (bpd) in 2014, the IEA said in its monthly Oil Market Report. That is 60,000 bpd lower than its previous forecast.
“Downward adjustments to the forecast of Russian oil demand for 2014 helped trim the global demand growth estimate,” the report said. “Developments in Crimea have weakened Russia’s macroeconomic outlook.”
The Paris-based IEA is the only one of the three main government oil forecasters to trim its 2014 demand growth projection in reports this week.
Its view follows lowered Russian economic growth outlooks from the International Monetary Fund and World Bank.
Brent crude edged down after the report’s release and as of 0845 GMT was off 31¢ at $107.15 a barrel.
The IEA lowered its view on 2014 supply from non-Opec countries, which pump about three in every five barrels. The agency now expects supply outside Opec to rise by 1.5mn bpd this year, 250,000 bpd less than it projected last month.
Accelerated rates of decline at older Russian oilfields accounted for part of the reduced supply forecast as did a lower estimate for Kazakhstan, where the giant Kashagan oilfield may fail to restart this year.
“While non-Opec supply growth is still forecast to be the highest in decades, expectations are being toned down somewhat,” the report said.
Supply from Opec declined by 890,000 bpd in March to 29.62mn bpd, according to the IEA, which said the group would have to pump more in the second half of the year.
“Opec, far from facing a supply glut, will have to raise production from March levels,” the IEA said.
In reports issued this week, Opec left its 2014 demand growth projection unchanged at 1.14mn bpd, while the US government’s Energy Information Administration raised its forecast by 10,000 bpd to 1.23mn bpd.
Meanwhile, Iran’s crude oil exports have surged to their highest in 20 months, far exceeding a one million barrel-per-day limit set by the West under an interim deal on curbing Tehran’s nuclear programme.
The International Energy Agency’s monthly report revised February’s global crude imports from Iran upwards by 240,000 bpd to 1.65mn barrels per day, the highest since June 2012.
Under a landmark deal signed in November between Iran and world powers – known as the P5+1 — that came into effect in January of this year, Iran’s exports are supposed to be held at an average 1mn bpd for the six months to July 20.
Tough international sanctions over the past two years have cut Iran’s oil exports around a half.
“The question is whether they are going to continue to test the sanctions,” Antoine Halff, head of the IEA’s oil industry and markets division, told Reuters.
China accounted for 168,000 bpd of the rise in imports in February, India for 93,000 bpd and South Korea for 83,000 bpd.
On the other hand, Japanese imports of Iranian oil were revised lower by 103,000 bpd, according to the IEA.
“Imports of Iranian oil are running well above 2013 levels for the third consecutive month,” the report said.
Preliminary data for March show imports from Iran dropped to 1.05mn bpd “but that figure will likely be revised upwards closer to February levels upon receipt of more complete data,” it said.
Importers of Iranian crude in March included Albania and Syria in addition to regular buyers China, India, South Korea, Japan and Turkey, the IEA said.
The IEA data is based on statistics provided to the organisation by member and non-member states as well as shipping data.
Tanker tracking sources estimated Iran’s crude exports averaged around 1.3mn bpd in March – the fifth straight month they had risen above 1mn bpd.