NEW DELHI (Reuters) - The International Energy Agency (IEA) does not expect a major increase in global oil prices despite efforts by OPEC and non- OPEC members to reduce output, its executive director Fatih Birol told Reuters.
OPEC and 11 other producers including Russia agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) in the first half of the year in an effort to eradicate a stubborn supply glut and boost prices.
That agreement, which provided an initial boost to crude prices, could be extended for six months, but Birol does not believe that prices would receive a significant boost.
“There is a tremendous amount of stock in the markets and to expect a major increase in the price is not very realistic,” he said, adding that downward price pressure will come from other producers.
“If we see the prices go up as a result of any push from the producers ... we will see more oil coming to the market, not just from the U.S.; we will also see Brazilian and Canadian oil coming to the market.”
U.S. shale oil production using fracking technology has turned the world’s largest oil consumer into an exporter of crude and products, while Canada is developing its vast oil sands deposits and Brazil is working on huge offshore fields.
The IEA estimates that global oil demand will grow by 1.4 million bpd this year.
Birol was in Delhi to announce ‘Association’ status for India with the IEA, which through its 29 members controls about 70 percent of world energy consumption.
The IEA sees India as the most important driver of global energy demand growth in the years to come, with its oil consumption expected to rise to about 10 million bpd by 2040.
Editing by David Goodman