Global oil demand growth eased to its weakest since 2012 last quarter, calming world markets amid threats to supplies in the Middle East and North Africa, according to the International Energy Agency.
The IEA cut estimates for oil demand growth this year and next after the annual expansion in fuel consumption slowed to 700,000 barrels a day in the second quarter, the lowest level since early 2012. The resulting supply surplus has meant that Libya, seeking to restore crude exports choked off by political feuding, is struggling to find buyers, the agency said in its monthly market report. Logistical constraints in southern Iraq may prove a bigger hurdle to bolstering output than violence in the north, it said.
“Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected, with an oil glut even reported in the Atlantic basin,” said the Paris-based agency, which advises 29 nations on energy policy. “The market appears confident that OPEC can deliver the production increase needed from it to meet rising demand expected in the second half of the year.”
Brent crude futures have declined 6.2 percent this year even as an Islamist insurgency flares in Iraq, tensions escalate between the West and Russia over Ukraine, and Libyan exports remain curtailed as political factions battle for control. Brent was at $104.20 a barrel on the ICE Futures Europe exchange in London today.