By Alex Lawler
LONDON, Oct 15 (Reuters) – The world oil market is heading for a sizeable surplus in the new year, the International Energy Agency said on Tuesday as it reassured that the agency stood ready to act if needed to cover any supply disruption from Iran.
Oil prices have risen in recent weeks on investor concern that Israel may retaliate against a missile attack from Iran, a major oil exporter and OPEC member, by hitting its oil facilities.
But the IEA, which manages industrialised countries’ emergency oil stocks, said public stocks were over 1.2 billion barrels and spare capacity in OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies such as Russia, stood at historic highs.
“As supply developments unfold, the IEA stands ready to act if necessary,” the IEA said in a monthly report on Tuesday.
“For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizeable surplus in the new year.”
Also in the report, the IEA further cut its global oil demand growth forecast for this year citing weakness in China.
The Paris-based agency now expects Chinese demand to grow by only 150,000 barrels per day in 2024, after consumption dropped by 500,000 bpd in August compared to the same month last year, a fourth consecutive month of declines.
“Chinese oil demand continues to undershoot expectations and is the principal drag on overall growth,” the IEA said.
China has for years driven global rises in oil consumption. The IEA has been saying that slower Chinese economic growth and a shift towards electric vehicles have changed the paradigm for the world’s second-largest economy.
OPEC also reduced its forecast for 2024 global demand growth in a report on Monday, but it projects a much stronger expansion of 1.93 million bpd, driven in part by a stronger contribution from China.
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(Reporting by Alex Lawler, Editing by Bernadette Baum and David Evans)
