Mubasher: The International Energy Agency (IEA) dismissed the possibility of a significant rally in oil prices, citing a slowing demand growth and global market oversupply.

“Prices are determined by the markets...If we see the market today we see that the demand is slowing down considerably,” IEA’s executive director Fatih Birol was quoted by Reuters as saying during a two-day energy conference in New Delhi.

“Substantial amount of oil is coming from the United States, about 1.8 million barrels per day, plus oil from Iraq, Brazil and Libya,” Birol said, dismissing any “huge increase” in prices in normal case.

The energy watchdog is downwardly revising its global oil consumption outlook to 1.1 million barrels per day (bpd), with another probable cut in the event of indications of a further weakness in the world’s economy, and most specifically China, Birol told the news agency.

However, the IEA’s executive warned that critical political tensions might still impact market dynamics.

It is worth noting that oil prices rallied on Friday after a US Navy vessel “destroyed” an Iranian drone in the Strait of Hormuz, one of the world’s critical shipping conduits for oil transportation.

In addition, the Paris-headquartered agency downplayed the impact of a global push towards environmentally friendly electric vehicles, on oil consumption growth, given that the main catalyst for crude demand was petrochemicals, not automobiles.

By 9:28 am GMT, US Nymex crude futures climbed by 1.34% to $56.04 per barrel (pb), while international benchmark Brent futures jumped by 1.74% to $63.01 pb.