The world can draw on global oil stocks and rely on Opec+ spare production capacity in case of a supply disruption erupting from the conflict between Iran and Israel, the IEA said today.
In its latest Oil Market Report, the Paris-based watchdog said it was "ready to act if necessary." It said IEA public stocks alone stood at over 1.2bn bl in addition to 500mn bl held under industry obligations. The IEA also said non-member China held 1.1bn bl of crude stocks, enough to meet 75 days of domestic refinery runs.
The IEA co-ordinated two emergency stock releases in 2022 after Russia invaded Ukraine.
The world's reliance on stocks would become more pronounced if any supply disruption extended beyond Iran's oil industry to include flows through the Strait of Hormuz. This would threaten most Opec+ spare production capacity of more than 5mn b/d as members such as Saudi Arabia, Iraq, Kuwait and the UAE are highly reliant on the waterway to export their oil.
But as long as supply keeps flowing, the IEA said that the market faces a "sizeable surplus" next year. The agency's latest balances show a supply surplus of 1.11mn b/d in 2025, up by 50,000 b/d compared with its estimates last month. For this year, the agency now sees a slight surplus of 90,000 b/d, compared with a slight deficit last month. In the final quarter of this year, the IEA sees a surplus of around 200,000 b/d.
Concerns over the strength of oil demand have been rising in recent months, with the IEA once again trimming its oil consumption forecast for this year. The IEA cut its 2024 global oil demand growth forecast by another 40,000 b/d this month to 860,000 b/d, with China once again the main driver.
A slowdown in China's economy remains the key drag on oil consumption growth. The IEA sees China's oil demand this year increasing by 150,000 b/d compared with 180,000 b/d in its report last month. At the start of the year the agency was guiding for growth of 710,000 b/d from China. The IEA also downgraded its estimated growth from China for next year to 220,000 b/d from 260,000 b/d last month, despite the country's recently announced stimulus packages.
For next year, the agency sees oil demand growth slightly higher at 1mn b/d, up by 40,000 b/d from last month's report. But growth for both 2024 and 2025 is set to remain well below 2023's post-pandemic surge in growth of just under 2mn b/d.
On global supply, the IEA kept its growth estimate broadly unchanged at 660,000 b/d. But it expects global growth to be just above 2mn b/d next year even if all Opec+ cuts are maintained. Some members of Opec+ are due to start unwinding 2.2mn b/d of voluntary cuts starting in December — although this is dependent on market conditions.
The IEA said that the 500,000 b/d fall in Opec+ crude production in September — led by Libya — could make it easier for the alliance to implement its plan to raise output, although healthy non-Opec+ supply growth next year will remain a concern.
The agency said global observed oil stocks declined by 22.3mn bl in August, led by a 16.5mn bl draw on crude. It also said preliminary data showed stocks fell further in September.
