Higher oil output from Opec and a slowdown in world economic growth means the crude oil glut will persist through next year, the world’s leading energy forecaster said on Tuesday

Higher oil output from Opec and a slowdown in world economic growth means the crude oil glut will persist through next year, the world’s leading energy forecaster said on Tuesday

The International Energy Agency said it expected a “marked slowdown” in oil demand growth as the stimulus from lower prices faded and as economic activity weakened in countries dependent on commodity revenues

“Oil at $50 a barrel is a powerful driver in rebalancing the global oil market,” the IEA said in its closely watched monthly report. “But a projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels

An increase in production from Opec member Iran once sanctions are lifted is expected to overshadow the first drop in US oil output since 2008, the IEA added

The collapse in oil prices has supported the strongest oil demand growth in almost a decade, with low prices helping boost demand by 1.8m barrels a day to 94.5m b/d. Gasoline demand has been particularly strong, suggesting motorists have been encouraged to drive more by lower prices. But the IEA forecasts that effect will fade, with demand growth set to slow to 1.2m b/d next year

The IEA, which uses the International Monetary Fund’s growth assumptions for its oil demand estimates, said the global economic outlook was “more pessimistic”. The fund said earlier this month the world economy would grow for 2015 at its slowest pace since the global financial crisis

Weaker economic growth in oil-dependent economies such as Canada, Brazil, Venezuela, Russia and Saudi Arabia will also have an impact on demand growth

“Lower commodity prices, with all else held equal, eventually equate to lower public spending and a potential dampening in consumer expenditure in many of these countries,” the IEA said

The largest Opec countries are slowly succeeding, however, in taking back market share from higher cost producers like US shale amid the oil price crash

World oil supply held steady near 96.6m b/d in September as a drop in output from the US, and other producers outside of Opec, was offset by increased supply from the cartel itself

“High-cost supply — primarily non-Opec — is being forced out,” the IEA said. “Supply in the US — which had been the motor of growth — is already sinking swiftly.”

Non-Opec supply slipped 180,000 b/d to 58.3m b/d in September as spending cuts of more than 20 per cent by the world’s biggest energy companies had an impact. Production is expected to average at this level for 2015, before dropping a further 500,000 b/d next year

“The sharpest slowdown is in the US,” the IEA said. “Further reductions in drilling activity since the start of September are expected to accelerate declines in US light tight oil production.”

Non-Opec supplies nevertheless exceeded expectations, with Brazil and Russia recording record output levels during August and September

Opec crude supply — led by record Iraqi output, which offset declines from Saudi Arabia — rose 90,000 b/d in September to 31.7m b/d. Year to date the group has pumped 31.2m b/d, 1m b/d higher than the same period a year ago, before the cartel decided to keep the taps open to win back customers rather than defend prices