IEA Does Not Believe Steel Tariffs Will Affect Global Oil Trade

  • IEA Does Not Believe Steel Tariffs Will Affect Global Oil Trade

IEA Does Not Believe Steel Tariffs Will Affect Global Oil Trade

The Asia-Pacific region is seen accounting for roughly 60% of global oil product demand growth over the next five years.

Opec spent the previous year making nice with its shale adversaries, but the U.S. frenemies continue to increase output and grab market share. Global demand will increase almost 7 million barrels per day by 2023 to 104.7 million barrels per day, the report said, with China the main proponent of growth in demand. Apart from the United States, Canada, Brazil and Norway will supply oil till 2020.

The International Energy Agency (IEA) now thinks that the USA could become the world's largest oil producer as early as this year, beating Russian Federation by producing more than 11 million barrels per day. With forecast capacity of 36.3 million bpd, Opec will be supplying less than 35 per cent of global demand by 2023 compared to its historic share around 40 per cent.

US President Donald Trump's planned 25% import tariff on steel is a gift to Organization of the Petroleum Exporting Countries (Opec) and Russian Federation.

Industry sentiment is indeed improving along with rising prices, but major oil companies are reluctant to invest vastly higher sums. "I think the oil companies would be the first to tell you that stability in the oil price is important to them", he said.

OPEC supply to grow by only 750,000 b/d in next five years.

The agency said the pipeline constraints have increased the forward discount for Canadian production, adding US$3.75 a barrel in 2018 and US$2 a barrel in 2019 to the forward differential curve between Western Canadian Select and WTI since its last report a year ago. Citi projects that even with expected declines in production in certain non-OPEC producing countries, continued increases from Brazil, Canada, Africa, and global natural gas liquids will overwhelm losses elsewhere, even without a higher than expected contribution from USA shale, assuming geopolitical events don't create an unexpected cutoff of a major producer.

While oil stocks typically rise this time of year as refineries frequently close for maintenance, an increase in US crude inventories has weighed on prices.

Brent for May settlement was 52 cents higher at $66.06/bbl on the London-based ICE Futures Europe Exchange, after rising $1.17 on Monday.

While more stringent emissions regulations and rise of electric vehicles and switch to natural gas vehicles will slow demand for oil, the fastest-growing source of global oil demand growth will be petrochemicals, particularly in the United States and China.

The price war sparked an industry recession, and oil prices plunged to a low of $27 a barrel.

The rise of the United States and the slightly weaker prospects for global demand growth are not particularly good news for the OPEC. Besides, U.S. energy firms added one oil rig last week, the fifth weekly increase in a row, bringing the total count up to 800, the highest since April 2011, pointing to more increases in output to come. Each year the world needs to replace 3 million bpd of supply lost from mature fields while also meeting robust demand growth.

In the United States, fuel-economy standards for passenger cars are seen curbing gasoline demand, but growth should come from the petrochemical sector, now thriving because of low-priced ethane.

"We all should look with responsibility to the market in order to keep the balance in the market as much as we can so as not to harm investors", said Ali Nazar, Iraq's national representative to OPEC.

"The generalized market anxiety over what could end up being a global trade war is dragging everything down", said John Kilduff, partner at investment manager Again Capital in NY.