Mubasher: The International Energy Agency (IEA) on Wednesday scaled back its oil demand growth projections for last year and this year.

The IEA also highlighted that producers from outside the Organization of the Petroleum Exporting Countries (OPEC) will help compensate supply shortages from Iran and Venezuela due to far-reaching US sanctions re-instated against the oil-rich nations.

Last year’s oil demand growth estimate has been downwardly revised by 70,000 barrels per day (bpd) to 1.2 million bpd, while the forecast for this year was slashed by 90,000 bpd to 1.3 million bpd, the energy watchdog said in its latest report.

“The changes reflect lower-than-expected 2018 data in large consuming nations such as Egypt, India, Indonesia and Nigeria,” the IEA report said.

Early figures for this year showed demand in Brazil, China and Japan as below calculations, the Paris-based agency noted.

On the supply front, global output saw a drop of 300,000 bpd last month, led by Iran, Azerbaijan, Kazakhstan and Canada, the IEA said.

The drop in Iranian output brought about “scope for other producers to raise supply,” according to the report.

Saudi Arabia, committed still to its output restraints and a production target of 10.3 million bpd, will decide along with other OPEC members and allied producers in the policy meeting next June whether to keep the agreement in place.

As far as non-OPEC supply is concerned, the IEA shed light on the US, where “strong permitting activity and a recovery in fracking activity in early 2019” should push production higher in the second half of this year.

This means that the US would help in keeping crude markets on an even keel, with the knock-on effect of tougher sanctions on Iran, where supplies dropped by 130,000 bpd to 2.61 million bpd last April before the sanctions waiver expired.

Non-OPEC supply is set to expand 1.9 million bpd, compared to 2.8 million bpd last year.

The IEA predicted that the US production will surge by 1.7 million bpd this year, compared to 2.2 million bpd last year.

At 1:22 pm GMT, US Nymex crude futures dropped by 0.92% to $61.21 per barrel (pb), while global benchmark Brent futures fell by 0.55% to $70.85 pb.