OPEC will need to pump more crude in the second half of the year to meet demand after its production plunged to a five-month low in March, according to the International Energy Agency.
Supplies from the Organization of Petroleum Exporting Countries “plummeted” by 890,000 barrels a day to 29.62 million barrels a day in March, the Paris-based IEA said today in its monthly oil market report. That’s below OPEC’s collective 30 million production target and means the group will have to increase output in the second half of the year, it said.
“OPEC supply actually registered a steep drop in March from February highs, but this setback looks likely to be short-lived,” the IEA, an adviser to oil-consuming nations, said. “Prospects for OPEC output are also on the rise - though not without considerable political risk.”
Brent crude oil prices have dropped 3.2 percent this year to trade at about $107.29 a barrel today amid rising U.S. production and signs of slowing emerging economies. The International Monetary Fund cut growth predictions for countries including Brazil, Russia, South Africa and Turkey earlier this month.
Production from OPEC’s 12 members dropped in March amid declines in Iraq, Saudi Arabia and Libya, the IEA said. The group, which is responsible for about 40 percent of world oil supplies, pumped 30.51 million barrels a day in February.
OPEC will need to provide 30.6 million barrels a day of crude in the second half, the agency estimated. That’s an increase of 350,000 barrels a day from the IEA’s previous forecast.
Global demand is seen increasing to 92.7 million barrels a day this year, little changed from last month’s report, according to the IEA. The agency trimmed its forecast for Russian oil consumption by 55,000 barrels a day to 3.5 million a day this year as its economy slows after the nation annexed Crimea.
“One month after the events in Crimea, market watchers are taking stock of their impact on oil markets,” the IEA said. “Given the still volatile nature of the situation on the ground, there are more questions than answers.”
Oil supplies from nations outside of OPEC are forecast to reach 56.2 million barrels a day this year, a downward revision of 200,000 barrels a day from the previous month, the IEA said.
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