The Organisation of the Petroleum Exporting Countries (Opec) can declare "mission accomplished" on its goal of shrinking global oil stockpiles, the International Energy Agency (IEA) said today.
The IEA said stocks in developed countries could fall below Opec's key five-year average target in May or June.
"Our balances show that if Opec production were constant this year, and if our outlooks for non-Opec production and oil demand remain unchanged, in 2Q18-4Q18 global stocks could draw by about 0.6m barrels per day," the IEA said in its monthly oil market outlook.
It is not for us to declare on behalf of the Vienna agreement countries that it is “mission accomplished”, but if our outlook is accurate, it certainly looks very much like it.
Opec and non-Opec nations including Russia signed a landmark deal to cut oil production at the beginning of 2017 in order to prop up global oil prices, and late last year they extended their agreement through 2018.
The IEA said Opec's compliance rate with these supply cuts was at 163 per cent in March due to extra cutbacks in places like Venezuela, Libya and Angola, while its non-Opec partners achieved a 90 per cent compliance rate.
"With just under half of global oil supply subject to restraint and oil demand growing steadily, the impact on stocks has been substantial," the agency said.
Non-Opec nations are expected to produce an extra 1.8m bpd this year, mainly due to the US, but demand will only grow by 1.5m bpd in 2018.
The price of the global oil benchmark, Brent crude futures, has risen to $72 a barrel on the back of worsening geopolitical tensions, with Donald Trump saying the US could fire missiles on Syria in a tweet.
The IEA said it "remains to be seen" if recent price rises caused by uncertainty in the Middle East can be sustained, and if so what the implications will be for the market demand and supply dynamics.