PARIS: The International Energy Agency on Wednesday cut its supply forecast for non-OPEC countries, citing downturns in North America and the “worsening conflict” in Yemen.
The Paris-based agency cut its 2015 forecast for non-OPEC output by 120,000 barrels a day to 630,000 bpd “on the back of a slightly more negative outlook for the US LTO (light tight oil) production and Canadian non-oil sands output, and of the fallout from the worsening conflict in Yemen,” it said in its monthly report.
“According to our latest estimates, fighting in Yemen has halved production to about 60,000 bpd in April, from an already depressed level of roughly 120,000 bpd,” the IEA said.
“Recently launched Saudi air strikes, while not targeting energy infrastructure directly, have led international oil companies active in the country… to practically halt operations and pull out expatriate staff,” the report said.
“The start of a Saudi-led military campaign against Yemen in late March sparked concern of possible supply disruptions through the area’s vital sea lanes,” it said.
In North America, the IEA cited “signs that US LTO production month-on-month growth will grind to a halt as early as May”, and noted a “continued drop in the number of oil rigs… reductions in capital expenditures, and a credit crunch among LTO producers in the US.”
In Canada, the IEA pointed to “falling drilling rates and an increasing backlog of uncompleted wells.”
Even though oil prices have more than halved in just six months, the OPEC oil cartel has refused to cut its supply volume.
Analysts believe this is because the cartel wants to use cheaper prices to force new US shale producers off the market.
The IEA also raised its forecast for world demand by 90,000 bpd to 93.6 million bpd.
It attributed “the notable acceleration” on 2014’s 700,000 bpd growth to cold temperatures in the first quarter of this year “and a steadily improving global economic backdrop”.