IEA warns on the ills of no OPEC deal

International Energy Agency (IEA) yesterday warned that there could be another year of relentless global supply growth in 2017, against its previous projection that supply and demand would fall into balance in the first half of 2017, should the OPEC fails to finalize the deal that the members agreed on in September.

In September, OPEC members surprised the oil market by agreeing on a deal that would keep the production from the cartel between 32.5 and 33 million barrels per day. According to the agency, OPEC produced about 33.8 million barrels per day in October. According to the deal, Iran, Libya, and Nigeria are exempted from abiding by the deal, which means close to a million barrel increase could come from these three countries. That in turn, would mean that other OPEC members would have to cut production between 1.6 to 2.3 million barrels per day. Some of the OPEC members like Iraq has already opposed cutting production. OPEC members are set to meet in Vienna on November 30th to finalize the deal.

According to the agency if supply continues to rise relentlessly next year the prices are set for another decline. As of now, production is rising from OPEC, supply from countries like Canada, Kazakhstan, and Brazil are set to rise by half a million barrels per day. Global oil supply rose by 0.8 million barrels per day in October.

WTI is currently trading at $44.2 per barrel and Brent at $1.3 per barrel premium.