Oil & Gas IEA confident global oil supply can absorb disruption By Eva Levesque October 15, 2024, 6:21 PM Backyard Productions/Alamy via Reuters Connect An oil refinery in Shanghai; China holds 1.1 billion barrels of crude oil stocks IEA ‘stands ready to act’ Fears of strike on Iranian sites Opec+ spare capacity at a high Escalating tensions between Israel and Iran are fuelling concerns that an attack on Iranian production facilities could disrupt global oil supply. But forecasts by the International Energy Agency (IEA) suggest there are adequate global supplies to absorb the impact of such an event. Iran, a major oil exporter and Opec member, ships 1.6 million barrels per day (bpd) of crude, primarily to China. A potential spillover of the conflict to the strategic Strait of Hormuz is a major concern. Despite this, the IEA said that it “stands ready to act if necessary” to cover any supply disruption. The agency said its member countries “can quickly take collective action”. “For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizable surplus in the new year,” the Paris-based watchdog said, despite a significant drop in global crude oil inventories in the last four months to their lowest level since 2017. The IEA added that Opec+ spare production capacity stands at historic highs, providing a further buffer. “Excluding Libya, Iran and Russia, effective spare capacity comfortably exceeded five million bpd in September,” said the IEA. Furthermore, China is able to cover 75 days of domestic refinery needs as it holds 1.1 billion barrels of crude oil stocks. The IEA forecasts oil demand to expand by just 900,000 bpd this year and close to one million bpd in 2025. Rapidly slowing Chinese economic output drives falling global oil demand. China’s declining demand Beijing has announced a substantial economic stimulus plan to revive its slowing economy. Still, experts warn that without addressing underlying structural issues, these efforts may only yield temporary relief instead of sustainable growth. “China is a big problem,” Adi Imsirovic, Surrey Clean Energy’s director, told the Gulf Intelligence energy podcast. Chinese oil demand dropped by 500,000 bpd year on year in August – its fourth consecutive month of declines. The world’s top crude importer bought 11.56 million bpd in August and 11.07 million bpd in September, according to Reuters. Global oil supply dropped by 640,000 bpd in September to 102.8 million bpd due to production disruption in Libya and field maintenance in Kazakhstan and Norway. Oil sinks 4% as potential Iran disruption fears subside The talk is of oil, but gas is most at risk in the Iran-Israel conflict IEA cuts oil demand forecast as Chinese economy stalls The non-Opec+ oil supply, led by the Americas, will grow by 1.5 million bpd in 2024 and 2025, the IEA predicts. Earlier this week, Opec cut its forecast for global oil demand growth in 2024 and 2025 for the third consecutive time. It anticipates world oil demand to grow by 1.93 million bpd in 2024, down from 2.03 million bpd it forecast in September. The oil producers’ group is still much more optimistic than other industry reports. For 2025, it expects that global demand will grow by 1.64 million bpd instead of 1.74 million bpd. Opec, which holds nearly six million barrels offline, is set to partially unwind its voluntary cuts in December.
