The IEA, which coordinates the energy policies of industrialised nations, said global stocks in developed countries could fall to their five-year average – a metric used by Opec to measure the success of output cuts – as early as May.
“It is not for us to declare on behalf of the Vienna agreement countries that it is ‘mission accomplished’, but if our outlook is accurate, it certainly looks very much like it,” the IEA said in its monthly report.
Vienna-based Opec has reduced production in tandem with Russia and other allies since January 2017 to prop up global oil prices, which soared above $ 70 per barrel this month, giving a new boost to booming US shale oil output.
But as oil production collapsed in Opec member Venezuela and still faces hiccups in countries such as Libya and Angola, the oil exporter group is producing below its targets, meaning the world needs to use stocks to meet rising demand.
On Thursday, the Organization of the Petroleum Exporting Countries said in its monthly report that oil stocks in the developed world were only 43 million barrels above the latest five-year average. The Paris-based IEA put the figure at just 30 million barrels as of the end of February.
The IEA said that even though non-Opec output was set to soar by 1.8 million barrels per day this year on higher US production, it was not enough to meet global demand, expected to rise by 1.5 million bpd or around 1.5 per cent.
With production declines in Venezuela and Africa, Opec was producing 31.83 million bpd in March, below the call on its crude for the rest of the year at 32.5 million bpd.
“Our balances show that if Opec production were constant this year, and if our outlooks for non-Opec production and oil demand remain unchanged, in 2Q18-4Q18 global stocks could draw by about 0.6 million bpd,” the IEA said.
The figure would represent 0.6 per cent of global supply or around half of Opec’s current production cuts of nearly 1.2 million bpd.
The output-limiting pact runs until the end of the year and Opec meets in June to decide its next course of action. Opec’s de facto leader, Saudi Arabia, has said it would like the pact to be extended into 2019.
Opec Secretary-General Mohammad Barkindo told Reuters on Thursday Opec and its allies were poised to extend the pact into 2019 even as a global glut of crude was set to evaporate by September.