Oil's Geopolitical Risks Are Offset by Plentiful Supplies, IEA Says.

According to the International Energy Agency (IEA), geopolitical risks to oil output in the Middle East and other regions are being balanced by ample global supplies, which is keeping oil prices stable. While tensions between Israel and Iran pose a threat to energy infrastructure in the region, the IEA predicts that increased American production will lead to an oil surplus in early 2025. The IEA also notes that spare capacity in the OPEC+ alliance is at record levels. The agency slightly adjusted its forecasts, projecting slower global oil demand growth due to a post-Covid rebound fading, cooling economic activity in China, and a shift away from fossil fuels. Chinese oil demand is particularly weak, with consumption down 500,000 barrels a day in August compared to the previous year. The report also highlights that rising supply outside of the OPEC+ coalition, driven by the US, Brazil, Canada, and Guyana, will result in a surplus of over 1 million barrels a day in 2025, replenishing current low inventories. However, if OPEC+ proceeds with plans to restore halted output in December, the surplus will be even larger. OPEC+ has been reducing output since late 2022 to support prices, leaving key members with a record level of spare production capacity. [Extracted from the article]