Robust demand, production uncertainty to tighten oil market by year-end, says IEA

ROBUST DEMAND AND PRODUC  TION uncertainty in some oil-producing countries are expected to tighten oil markets as we approach the end of the year, Fatih Birol, executive director, International Energy Agency (IEA) has said.

Fatih said he believes that oil demand growth will continue to be very strong, and coupled with the collapse in Venezuela and what he called the “fragility of production” in countries, including some in the Middle East, the oil markets are set for tightening toward the end of this year.

The agency earlier this month, had said that global oil supply could become “very challenging” when U.S. sanctions on Iran return, but added that “trade tensions might escalate and lead to slower economic growth and in turn lower oil demand.”

A major contributor after Iran to the oil market tightening is Venezuela. Venezuela is currently suffering the worst loss of oil production in history amid an unprecedented economic collapse, years of mismanagement and underinvestment in the oil industry, and an aggravating humanitarian crisis.

The International Monetary Fund ( IMF) has also predicted that Venezuela’s inflation will surge to one million percent by the end of this year as the country, with the world’s biggest oil reserves remains stuck in a profound economic and social crisis.

The Paris based agency also said that it has not changed its economic and oil demand assumptions, but it is “mindful that demand growth could cool down later this year and into 2019.”