A deal to freeze oil production by OPEC and non-OPEC producers will have a limited impact on global supply and markets are unlikely to rebalance before 2017, the International Energy Agency said on Thursday.
The IEA, which oversees the energy policies of industrialized nations, said even though the decline in US output was gathering pace and Iran was not adding as many barrels as expected, the world would still produce more oil than it consumes throughout 2016, Reuters reported.
Oil has collapsed since mid-2014 to as low as $27 per barrel, from as high as $115, due to booming OPEC and US supplies.
Prices have recovered to above $40 per barrel in recent weeks, as US production declines and as major OPEC and non-OPEC producers are due to meet in Doha, Qatar, on April 17 to agree a deal to freeze global production.
"If there is to be a production freeze, rather than a cut, the impact on physical oil supplies will be limited," the IEA said in its monthly report.
"With Saudi Arabia and Russia already producing at or near record rates and very little upside seen apart from Iran, any deal struck will not materially impact the global supply-demand balance during the first half of 2016," the IEA said.
The world has built record stocks over the past year, in excess of 3 billion barrels, as production has exceeded demand. The IEA expects stocks to grow by 1.5 million bpd in the first half of 2016, slowing to 0.2 million bpd in the second half, unchanged from last month.
The agency, which is due to publish its 2017 estimates in June, slightly trimmed its estimates for the 2016 global demand growth from last month to 1.16 million barrels per day.
That represents a significant decline from the very strong growth of 1.8 million bpd in 2015 on the back of low oil prices. The IEA said demand growth was slowing in China, the United States and much of Europe.
"India could be replacing China as the main engine of global demand growth," the IEA said, estimating its demand growth at 300,000 bpd, the strongest-ever volume increase.
On the supply side, the IEA said it saw non-OPEC production falling by around 700,000 bpd in 2016, little changed from last month.
