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Investing.com - World oil output is now anticipated to be higher than previously forecast this year, even as supply could be dented by sanctions on Russia and Iran, according to a monthly report from the International Energy Agency.
The IEA said on Thursday that global oil production is projected to rise by 2.7 million barrels per day in 2025, compared to a prior estimate of 2.5 million bpd. Next year, the figure is seen increasing by a further 2.1 million barrels per day.
But the group flagged that the outlook for supply is facing conflicting trends, with the possibility of fresh international penalties being placed on Moscow and Tehran. So far, harsher sanctions have had a "modest impact" on supply and trade flows, despite exports from both of the countries trending lower in recent months.
At the same time, markets are assessing plans for elevated production by the Organization of the Petroleum Exporting countries and its allies, known as OPEC+. On Sunday, the group agreed to raise production by a cumulative 137,000 bpd in October, much lower than hikes of about 555,000 bpd and 411,000 bpd in earlier months.
Meanwhile, China, the world’s biggest oil importer, has continued to stockpile crude oil, helping keep Brent crude futures in slight backwardation -- or when the current price of oil is higher than that in the futures market.
Since August, Brent prices have moved in a relatively narrow band, the IEA noted. At 05:18 ET (09:18 GMT), Brent futures were down 0.3% at $67.30 a barrel.
"Oil markets are being pulled in different directions by a range of forces," the IEA, which provides advise to industrialized nations, said.
The forecast for worldwide oil demand also remains "largely unchanged," the report flagged, with growth of around 700,000 bpd expected for both 2025 and 2026. The IEA added that crude demand typically declines by roughly 1 million bpd from its peak during the travel-heavy summer period to the end of the year, while refinery activity slumps by 3.5 million bpd from August to October.
Global oil inventories are now seen rising by an "untenable" 2.5 million bpd on average in the second half as "supply far outstrips demand," the IEA said.
However, it noted that "there are a number of potential twists and turns ahead -- including geopolitical tensions, trade policies and additional sanctions on Russia and Iran -- that could yet alter market balances."