Mubasher: The global oil market could shift into supply shortage sooner than expected, the International Energy Agency (IEA) said on Thursday.

The IEA’s prediction was based on output cuts announced by the Organization of Petroleum Exporting Countries (OPEC) and Russia and Canada’s decision to reduce supply.

In its previous report in November, the IEA expected the global oil market to remain well supplied throughout the next year.

However, the Paris-based agency expects now a deficit to materialise in the second quarter of next year, if OPEC sticks to its supply curb agreement.

“Time will tell how effective the new production agreement will be in rebalancing the oil market,” the IEA said.

The producer club last week agreed with allied suppliers, including Russia and Oman to reduce production by 1.2 million barrels per day (bpd) starting from next January to clear a build-up in unused stockpiles of fuel.

Moreover, a decision by the government of Canada’s Alberta province to force oil producers to curb supply would deliver the largest reduction to crude output next year, the energy watchdog said.

Alberta crude and oil sands production would slip by 325,000 bpd from January to force down vast stockpiles which built up because of pipeline capacity constraints.

In addition, the IEA left its forecast for global oil demand growth at 1.4 million bpd, unchanged from its estimate last month, expecting growth of 1.3 million bpd for this year.

“For 2019, our demand growth outlook remains at 1.4 million bpd even though oil prices have fallen back considerably since the early October peak,” the IEA said.

“Some of the support provided by lower prices will be offset by weaker economic growth globally, and particularly in some emerging economies,” it added.

Oil prices dropped by nearly a third so far this quarter around $61 per barrel (pb), from a four-year high of around $87 pb reached in early October.

“Uncertainty about trade tensions and tighter monetary policies continue to affect confidence and investment,” the agency said.

The Organisation for Economic Cooperation and Development (OECD) expected last November that world economy would grew at a slower pace of 3.5% for the next year from 3.8% for this year.

“The OECD’s lower expectation for the world economy in 2019 could reduce oil demand growth by roughly 100,000 bpd,” the IEA said.

By 10:30 am GMT, US Nymex crude futures declined 0.57% to $50.86 pb, while international benchmark Brent futures fell 0.68% to $59.74 pb.