PARIS, February 10. /TASS/. The oil output in Russia will drop by 1.4% in 2015 year-on-year to 10.75 million barrels per day, the International Energy Agency (IEA) said in its annual Medium-Term Oil Market Report on Tuesday.
Russia will face a production cut by 560,000 bpd from 10.9 million barrels per day in 2014 to 10.4 million barrels per day in 2020, the agency said. "Russia faces a perfect storm of lower prices, sanctions and currency swings, pushing its production into contraction," the report said.
According to the IEA forecasts, the US will remain the main source of the global production growth by 2020. The US oil revolution has made non-OPEC production more responsive to price swings than during previous market selloffs, the report said, adding that this would likely set the stage for a relatively swift recovery. "At the same time, lower oil prices will not provide as strong a boon to oil demand growth as might be expected," the IEA said.
As producers take an axe to their spending, supply will grow far more slowly than previously projected, according to the report, but global capacity is still forecast to expand by 5.2 million barrels per day by 2020. "Assuming that international sanctions on Iran remain in place, OPEC growth in crude production capacity is expected to be limited to 200 000 barrels per day per year," the report said. "The overwhelming majority of that growth will come from Iraq and will thus be at significant risk as geopolitical instability there persists," the IEA said.
The agency expects the political risk to supply to remain extraordinarily elevated in the next few years, both on the upside and the downside. "Lower oil prices may heighten the risk of political disturbances in oil-export-dependent economies countries with low buffers, but can also offer an incentive to maximize output and stimulate production growth," the report said.
The recent crash in oil prices will cause the oil market to rebalance in ways that challenge traditional thinking about the responsiveness of supply and demand, said IEA Executive Director Maria van der Hoeven, who launched the report at the Energy Institute’s International Petroleum Week on Tuesday in London.