The global oil supply reached a record 100 million barrels per day (bpd), the International Energy Agency (IEA) said in its latest forecast.
Crude output from the the Organization of the Petroleum Exporting Countries (OPEC) and Russia, rose to a nine-month high in August, to 32.63 million bpd, due to a rebound in Libya production and increases from Iraq, Nigeria and Saudi Arabia, the IEA said.
Non-OPEC supply was also up 2.6 million bpd, led by U.S. production, it added.
However, ongoing Iranian and Venezuelan falls in production could risk market tightness, the Paris-based agency said.
Increased sanctions from the U.S. against Iran, which is a member of OPEC, have put pressure on the organization and could lead to market tightness. The financial sanctions against Iran will target the petroleum sector in November, when a global drop of crude supply is expected. OPEC agreed in June to raise output at a nominal increase of 1 million barrels a day (bpd) amid pressure from the U.S. to decrease prices.
Oil demand estimates were little changed, with the IEA predicting non-OPEC oil output growing by 2 million bpd in 2018 and 1.8 million bpd in 2019 amid “relentless growth led by record output from the U.S.” Global oil demand is expected to be 100.29 million bpd in the fourth quarter of 2018 and 99.27 million bpd in the first quarter of 2019.
The IEA put total spare capacity at 2.7 million bpd, 60 per cent of which is in Saudi Arabia. That is a larger buffer than some other analysts believe, although the IEA notes that just because the headline figure is 2.7 million bpd, that does not mean that all of that is available on short notice.
Oil prices rose at the end of last week as the market began worrying about supply concerns ahead of the U.S. sanctions on Iran.