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Agency said it expects global oil demand to grow by 1.4m barrels per day in 2019

Oil demand will grow steadily in 2019 thanks to a solid global economy, but the world may face a large supply gap by late next year if Organisation of the Petroleum Exporting Countries (Opec) cannot cover any supply shortfalls, the International Energy Agency said yesterday.

The report serves as a stark warning to the world’s largest oil exporters, who meet next week in Vienna to discuss supply policy.

The IEA said it expects global oil demand to grow by 1.4 million barrels per day in 2019, to top 100 million barrels per day (bpd) by the second quarter of the year. The agency expects demand to grow at the same rate this year, unchanged from its last report in May.

“A solid economic background and an assumption of more stable prices are key factors. Risks include possibly higher prices and trade disruptions. Some governments are considering measures to ease price pressures on consumers,” the Paris-based agency said in its monthly report.

“There is the possibility of a downward revision to our economic assumptions in the next few months. The world economy is feeling some pain from higher oil prices.”

The oil price has risen by a third to around $76 (Dh279) a barrel, close to its highest since late 2014, since Opec and other producers including Russia began cutting production in January 2017 by 1.8 million bpd.

“Increasing trade tensions are the main risk to our oil demand forecast,” the IEA said.

Canada and the European Union have announced plans to increase tariffs on selected US goods in response to US duties on steel and aluminium imports.

“The risks associated with escalating retaliations are not negligible ... A prolonged slowdown in trade would negatively affect world GDP growth and oil demand, as a significant part of oil consumption is linked to trade activities.”

Opec decision

Opec meets on June 22-23 to discuss its supply policy, particularly in light of protracted declines in Venezuela and the prospect of new US sanctions on Iran later this year.

The group, together with its partners, may consider raising output to compensate for any supply shortfalls.

“Even if the Iran/Venezuela supply gap is plugged, the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption,” the agency said.