Global oil supply declined by 600 thousand barrels per day (b/d) in September after the UAE reduced production and field maintenance cut output in the North Sea and Brazil, which more than offset a US rebound from August’s hurricane shut-ins, according to the International Energy Agency's (IEA) monthly oil report on Wednesday.
September’s supply drop to 91.1 million b/d came as a sharp supply cut from the UAE helped to boost overall OPEC+ compliance to 103% in September versus 98% in August, with all major producers apart from Russia pumping at or below their targets, the report showed.
OPEC's total oil supply increased to 29.21 million b/d in September, marking a drop of 340 thousand b/d from the previous month's level of 29.55 million b/d in August.
“Our calculations show that despite September’s stricter adherence to the supply pact, previously non-compliant producers must cut output by more than 100 million barrels. The largest reductions would be required from the UAE (33 million barrels), Iraq (17 million barrels) and Russia (15 million barrels). By contrast, Saudi Arabia, Malaysia and Nigeria have out-performed versus their targets,” the report said.
The report revealed that output from other OPEC members taking part in supply cuts held broadly steady, while Libya and Venezuela posted notable increases.
- Global demand to fall in 2020 but recover in 2021
The IEA estimated that a demand rise by just 350 thousand b/d month-on-month (m-o-m) in September, the smallest such gain recorded since May, and with one country, India, responsible for the lion’s share of the gain due to easing coronavirus restrictions.
“Global oil demand rose 3.4 million b/d m-o-m in July, as coronavirus restrictions eased and summer holidays in the northern hemisphere supported a rise in transport fuel demand. However, a second wave of Covid-19 cases and new movement restrictions are now slowing demand growth,” the IEA said.
The IEA estimates that global oil demand will decrease by 8.4 million b/d in 2020 to 91.7 million b/d compared to last year, but recover by 5.5 million b/d in 2021 to 97.2 million b/d.
In 2020, the Asia Pacific region is anticipated to lead demand with 33.6 million b/d, followed by the Americas with 28.6 million b/d and Europe with 13.4 million b/d.
The IEA said the aviation sector remains deeply affected by the crisis. The number of scheduled flights remained 47% below last year’s level in September, according to UK-based global travel data provider OAG.
By Sibel Morrow