by Natalie Grover and Alex Lawler

LONDON (Reuters) – The International Energy Agency (IEA) said on Friday that OPEC+ production cuts could erode inventories through the rest of the year and push prices higher, before economic winds opposites will limit the growth of global demand in 2024.

OPEC+ oil production cuts and rising global demand are supporting oil prices, with Brent hitting highs of over $88 a barrel on Thursday, its highest since January.

According to the IEA, if current OPEC targets are maintained, oil inventories could decline by 2.2 million barrels per day (mbpd) in the third quarter and 1.2 mbpd in the fourth, “which would risk to push prices up.

“The deeper supply cut from OPEC+ has come together with improving macroeconomic sentiment and ever-higher global oil demand,” the Paris-based agency said in a statement. its monthly oil market report.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, began limiting production late last year to support prices, and in June they extended their production cuts until 2024.

The IEA said that in July, global oil supply fell by 0.91 mbpd, in part due to a sharp cut in Saudi production. However, Russian oil exports remained stable at around 7.3 mbpd in July, according to the IEA.

GROWTH IN DEMAND REVISED DOWN FOR 2024

Next year, demand growth is expected to slow sharply to 1 mbpd, according to the IEA, due to sluggish macroeconomic conditions, a faltering post-pandemic recovery and growing use of electric vehicles. .

“With the post-pandemic rebound largely over and as multiple headwinds challenge the OECD outlook, oil consumption growth will slow significantly,” the IEA said, referring to OECD countries. Organization for Economic Co-operation and Development (OECD).

The IEA’s demand growth forecast is 0.15 mbpd lower than last month and contrasts with OPEC, which on Thursday maintained its forecast that oil demand will increase by 2.25 mbpd in 2024.

“The global economic outlook remains clouded by soaring interest rates and tighter bank credit, which are weighing on businesses already struggling with slowing production and trade,” the agency said.

For 2023, the IEA and OPEC forecasts are closer: the IEA forecasts an increase in demand of 2.2 mbpd in 2023, supported by air transport, the increased use of oil for the production of electricity and the boom in Chinese petrochemical activity. OPEC forecasts an increase of 2.44 mbpd.

Demand is expected to reach 102.2 million bpd this year, with China accounting for more than 70% of demand growth, despite worries about the economy of the world’s biggest oil importer.

(Report Natalie Grover, Alex Lawler, Corentin Chapron, edited by Jean-Stéphane Brosse)

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