China and sovereign debt could dwarf Gulf spill's market impact
The spill is not the only problem facing the oil industry
The Deepwater Horizon disaster might be a supply side game-changer, says the IEA. But the threat to global economic recovery posed by sovereign debt problems in the OECD and the sustainability of Chinese oil demand growth are probably bigger concerns in the short-to-medium term, it says.
The agency says Gulf of Mexico deep-water oil supply could be 100,000-300,000 b/d lower by 2015 than it previously estimated, but whether the spill turns out to be a "defining moment for broader US energy policy and for offshore oil and gas development worldwide remains to be seen".
In May, meanwhile, global oil supply fell by 0.57m b/d to 84.11m b/d, largely as a result of lower non-Opec output, particularly in Europe, as North Sea operators carried out seasonal maintenance. Supply was up by 2.2m b/d on the previous year, however, with growth split equally between Opec and non-Opec producers. OECD industry stocks rose sharply, by 47.9m barrels, to 2.726bn barrels – more than twice the 17.8m barrel five-year average build.
Output growth from Iraq (not constrained by a quota) largely offset falls across the Opec group, especially from Nigeria and Angola. Iraq's production and exports rose by 125,000 b/d in May, reaching 2.41m b/d and 1.89m b/d respectively. Excluding Iraq, production by the 11 members with output targets fell by 160,000 b/d to 26.61m b/d. Including Iraq, May's oil output was down by 30,000 b/d at 29.02m b/d, leaving spare capacity at a healthy 5.4m b/d.