The International Energy Association (IEA) has warned that the oil supply is “vulnerable” to the tensions and conflicts that have rebounded in the Middle East in recent months, as evidenced by its monthly report on the crude oil market, published this Thursday.
“The recent tension in the Middle East has once again added another layer of uncertainty to the forecasts of the oil market,” explained the Paris-based agency. “We cannot know how the geopolitical situation will develop, but for now it seems that the risk of a major threat to the oil supply has receded,” the IEA has clarified.
Specifically, the document notes that the increase in the production of non-OPEC countries and the ‘stock’ of OECD crude, which is nine million barrels above the average of the last five years, provides a ‘solid base to react in the event of a new escalation of geopolitical tensions.
Iraq’s oil vulnerability occurs in a context in which the Arab country has gained strategic importance as a producer. In the last decade, Baghdad has doubled its oil exports, reaching four million barrels per day. The IEA partially attributes this growth to the effect of US sanctions on Iran’s exports, which have fallen to 300,000 barrels per day, and to the “collapse” of production in Venezuela.
“In the medium term, the increase in security problems could make it difficult for Iraq to further develop its production capacity. Instead, it could make it increasingly difficult to ensure that there is additional production capacity to meet the growing global demand in the second half of this decade,” said the IEA.
For the whole of 2020, the association forecasts that the demand for crude oil will rise by 1.2 million barrels per day, thanks to the fact that prices “remain partially weak”, as well as the greater growth of world GDP and the “progress” in solve commercial disputes. During this year, the production of countries outside the Organization of Petroleum Exporting Countries (OPEC) will grow by 2.1 million barrels per day.