PARIS: An oil production shortfall in Iran and Venezuela may force OPEC and Russia to decide later this month to open their taps, the International Energy Agency said Wednesday.
Even if the supply gap, triggered by the return of US sanctions on Iran and a major political crisis in Venezuela, is plugged, the oil market will likely remain vulnerable to disruption next year, the IEA warned.
US President Donald Trump in May announced he would pull out of a landmark 2015 nuclear agreement with Iran that had eased sanctions on the oil giant.
Pumped further by global trade war fears, oil prices have since surged to multi-year highs, only to then fall back again somewhat, the IEA said.
Prices peaked in late May, scraping the $80 per barrel ceiling on the Brent futures contract and $72.24 on the West Texas Intermediate.
Barely recovered from the roller coaster ride of recent weeks, traders are holding their breath for the June 22 meeting of oil ministers from OPEC member states in Vienna.
OPEC and Russia decided together in 2016 to cut their supply in order to push prices up following a crash in prices induced by a global crude production glut.
But the Paris-based IEA, echoing statements from oil producers as well as analyst comment in recent weeks, said there may be a change to the so-called Vienna agreement.
“We have looked at a scenario, not a forecast, showing that by the end of next year output from these two countries (Venezuela and Iran) could be 1.5 mb/d (million barrels per day) lower than it is today,” it said in a report.
“To make up for the losses, we estimate that Middle East OPEC countries could increase production in fairly short order by about 1.1 mb/d and there could be more output from Russia on top of the increase already built into our 2019 non-OPEC supply numbers,” it added.
The IEA meanwhile warned that whatever the outcome of the meeting, “the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption.”
It added: “We support all efforts to minimize supply disruptions that, as history shows us, are not in the interests of either producers or consumers.”
The IEA meanwhile revised upwards its estimate for 2018 non-OPEC growth to 2 mb/d, and to 1.7 mb/d in 2019.
“The United States shows by far the biggest gain (about 75 percent of the total across 2018 and 2019), but recently this expansion has not been without stress,” the report said, referring to a gap in recent weeks between the US and European oil futures contracts.
The IEA report comes a day after OPEC warned of “considerable uncertainty as to world oil demand.”
Iran, Venezuela oil output to dominate OPEC meet, energy watchdog says
Iran, Venezuela oil output to dominate OPEC meet, energy watchdog says
Free trade negotiations between GCC, India mark new phase of partnership, says sec-gen
RIYADH: The Gulf Cooperation Council’s secretary-general affirmed that the negotiations for a free trade agreement between the GCC and India, and the signing of the joint statement, represents a new phase of strategic partnership.
Jasem Mohamed Al-Budaiwi said that this contributes to enhancing close cooperation and strengthening economic and trade ties, according to the Saudi Press Agency.
This came during the signing ceremony of the joint statement on launching the free trade agreement negotiations between the Al-Budaiwi and India’s Minister of Commerce and Industry, Piyush Goyal, which took place in New Delhi, on Tuesday.
During the signing ceremony, Al-Budaiwi said that the Terms of Reference, signed on Feb. 5, provide a comprehensive and clear framework for these negotiations. The two nations agreed to discuss enhancing cooperation in vital strategic areas, including trade in goods, customs procedures, and services.
Additionally, the framework covers Sanitary and Phytosanitary measures, intellectual property rights, cooperation on Micro, Small, and Medium Enterprises, along with other topics of mutual interest. This reflects the comprehensive nature of the agreement and its ability to keep pace with the future economy.
Al-Budaiwi expressed hope that these negotiations would lead to a comprehensive and ambitious free trade agreement that works to remove customs and non-customs barriers, enhance the flow of quality investments in both directions, and achieve further liberalization in trade and investment cooperation between the GCC and India for mutual benefit.
This would provide a stimulating economic environment and an investment climate that opens broad horizons for the business sector, supports supply chains, and accelerates the pace of economic growth in line with the ambitious developmental visions of the GCC states.
The top official affirmed the full readiness of the General Secretariat to host the first round of negotiations at its headquarters in Riyadh during the second half of this year.
The two sides held a meeting during which they reviewed the existing cooperation relations between the GCC and India and discussed ways to develop and elevate them to broader horizons, serving mutual interests and enhancing opportunities for strategic partnership between the two sides, particularly in the economic, investment, and trade fields.
They praised the role undertaken by the negotiating teams from both sides, appreciating the efforts contributing to reaching a comprehensive agreement that enhances economic integration and supports the smooth flow of trade between the two nations.
