“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,” the International Energy Agency said.
Some of these conflict factors, which could be expected to raise tension and prices on the oil market, might even work in the opposite direction, the agency said.
Tit-for-tat trade sanctions affecting Russia over the crisis in eastern Ukraine could end up depressing growth of the Russian economy and demand for oil, the IEA said.
Libya, where some oil facilities had resumed activity despite a high level of disruption in the country, was reportedly having difficulty funding buyers for this renewed production on the market.
The IEA, the oil policy arm of the Organisation for Economic Cooperation and Development, cut back its forecast for the growth of demand of oil this year.
It said this was because consumption in the second quarter was weak and because the International Monetary Fund had lowered its forecast for global economic growth this year by 0.3 percentage points to 3.4 percent.
Lower economic growth means an easing of demand for energy, including oil, and the IEA also lowered its forecast for oil demand in 2015.
But a central thrust of its report was that, so far, potential risks for the oil market from conflict and tension in Iraq, over Gaza, in Libya, and over Russia and eastern Ukraine was being more than countered by unspectacular growth of the global economy.
This was containing demand for oil and was therefore bearing down on prices.
“The global oil demand growth estimate for 2014 has been curtailed,” since last month to show a gain of 1.0 million barrels a day, down from 1.2 mbd foreseen in last month’s report, although the figures were skewed by adjustments of previous demand data.
Overall demand this year would be 92.7 mbd. In the second quarter of this year, the growth of demand of 700,000 barrels per day “fell to its lowest level since the first quarter of 2012.”
Growth of demand would then pick up next year to 1.3 mbd on firmer economic growth, but the agency lowered the pace of this pick-up by 90,000 bd because of “lower forecasts for China, Russia and Japan”.
However “global supply was up 230,000 bd in July to 93.0 mbd, with higher OPEC output offsetting slightly lower non-OPEC supply,” the IEA said.