Oil supply from countries outside the Organization of the Petroleum Exporting Countries is likely to see its biggest drop in more than two decades next year following a recent fall in crude prices, the International Energy Agency said on Friday.
According to the IEA’s latest monthly market report, oil production from non-OPEC members such as the U.S. and Russia is expected to fall by almost 0.5 million barrels a day.
Oil prices hit their lowest level in six years last month amid concerns about oversupply and the outlook for the world economy as China’s growth slows.
Brent crude oil prices were trading at $48.36 a barrel in early Europe trade Friday; having fallen almost 25 percent so far this year. They have halved in value in the past year.
U.S. crude prices were down 1.4 percent to $45.26 a barrel, having tumbled about 23 percent since the start of the year.
“The big story this month is one of tightening supply, with the spotlight firmly fixed on non-OPEC,” said the IEA, founded in 1974 to help countries co-ordinate a collective response to major oil-supply disruptions.
“Oil’s price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day – the biggest decline in 24 years,” the group said in a note.
While the recent volatility in oil has been “unnerving,” the IEA said the fall in oil prices “is forcing the market to behave as it should by shutting in output and coaxing demand.”
And the oil rout has prompted many analysts to revise down their forecasts for the commodity also referred to as “black gold.”