IEA Sees Record Middle East Oil Supply as U.S. Output Slumps
Oil production from the Middle East has climbed to a record while U.S. output slumps, the International Energy Agency said, in a sign that OPEC’s strategy of defending market share is succeeding.
Middle Eastern output exceeded 31 million barrels a day for a third month in June amid near-record supply from Saudi Arabia, while U.S. oil production slid 140,000 barrels a day to 12.45 million, the Paris-based agency said in its monthly market report. The IEA, which mostly kept forecasts for supply and demand unchanged, said that while the re-balancing of global oil markets is progressing, record-high inventories remain “a threat to the recent stability of oil prices.”
“When U.S. shale production was moving upwards very fast it became fashionable to talk of lower reliance on traditional suppliers,” the IEA said. The Middle East’s resurgence is “an eloquent reminder that even when U.S. shale production does resume its growth, older producers will remain essential for oil markets.”
Oil has recovered more than 70 percent from the 12-year low reached in January as Saudi Arabia’s strategy to pressure OPEC’s rivals succeeds in reversing the U.S. shale oil boom. Elevated output from the Middle East pushed the region’s share of world supplies to 35 percent, the highest since the late 1970s, according to the IEA. (by Grant Smith, Bloomberg)