Brexit disorder could dampen global oil thirst, International Energy Agency says
A “disorderly” Brexit could hit international demand for oil, the International Energy Agency (IEA) said today while also warning of the impact of trade wars.
The projection comes after the International Monetary Fund (IMF) downgraded its short-term outlook as economic sentiment weakens in many countries.
Read more: Will global growth slowdown force more OPEC production cuts?
“Ongoing trade disputes between major powers and a disorderly Brexit could lead to a reduction in the rate of growth of international trade and oil demand,” the IEA said.
“But while the economic mood is not encouraging, we expect oil demand to grow in our forecast, although at a more measured pace,” it added.
The forecasts rely on growth to continue in China and India, which are expected to account for 44 per cent of demand increases over the next five years, the IEA said.
Meanwhile, the boom of US shale is transforming global markets, as the country looks set to provide 70 per cent of the rise in global supply until 2024.
“Thanks to the remarkable strength of its shale industry, the United States is triggering a rapid transformation of global markets. Before the end of our forecast, it will export more oil than the Russian Federation and close in on Saudi Arabia as the world’s largest exporter,” the agency said.
Other contributors will include Brazil, Canada and a “resurgent” Norway, it added.
The report is likely to worry energy ministers across the Middle East, as producers' cartel Opec looks to stabilise oil prices.
The group slashed its output at the beginning of this year to offset the rise caused by a glut of US shale oil.
Read more: British producers pump out more oil as small firms fill hole left by majors
The IEA said British oil output was set to drop further after a temporary boost in 2019 when BP is set to ramp up capacity.
Production in the UK hit 1.6m barrels per day last year but will fall 0.3 per cent to 1.57m by 2024, the report predicted.