(Reuters) – A surplus of one million barrels per day (bpd) of oil is expected to keep a lid on prices in the first half of 2020, International Energy Agency (IEA) Executive Director Fatih Birol said on Tuesday.
Birol told the Reuters Global Markets Forum on the sidelines of the World Economic Forum meeting in Davos, Switzerland, that prices could not be expected to rise significantly under “normal conditions” although unexpected developments, such as rising instability in Iraq, could alter the situation.
Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC), has recently seen violent clashes between police and anti-government demonstrators, who are pressing for an overhaul of the country’s political system.
Below are excerpts from the interview:
Question (Q) – What are your main concerns for energy markets in 2020?
Answer (A) – I see an abundance of energy supply in terms of oil and gas. It’s the reason that recent incidents we have seen – with the Iranian general killed, Libya unrest – didn’t boost international oil prices.
We still have $65 oil prices like we did at Davos last year, but we shouldn’t be too relaxed. I have concerns about possible developments around Iraq – OPEC’s second largest oil producer. I hope Iraq keeps its stability, and as an important producer, continues to bring oil to the markets.
The second issue is climate change, which is at the heart of the debate. The energy sector is in fact at the heart of climate change. Therefore, how the energy sector will adapt is a key issue for energy companies.
Q – Do you see crude oil prices remaining around current levels of $65 per barrel?
A – We expect, even with the cuts coming from OPEC+, we think at least the first half of this year, we will see a surplus of 1 million bpd. That’s the comfortable market outlook.
In normal conditions, we can’t expect prices to go up significantly, but once again, there may be unexpected issues, such as those I mentioned around Iraq.
Q – What are your forecasts for 2020 on oil supply and demand?
A – We expect oil demand to increase by about 1 million bpd, mainly from emerging countries.
Supply will grow very strongly from non-OPEC countries. From the United States, Brazil, Norway, Guyana, we expect more than 2 million bpd of oil.
This interview was conducted in the Reuters Global Markets Forum, a chat room hosted on the Eikon platform.
Reporting by Divya Chowdhury in Davos, Aaron Saldanha and Lisa Mattackal in Bengaluru; Editing by Mark Potter.