Global oil supply has declined to its lowest level in nine years due to massive production cuts by OPEC+ nations, according to the International Energy Agency’s (IEA) monthly oil report on Friday.

Oil supply globally plunged to an average of 86.86 million barrels per day (bpd) in June, down 2.39 million bpd from May, according to the IEA’s Oil Market Report for July 2020.

OPEC’s total oil supply declined to 27.19 million bpd in June, down by 1.92 million bpd from the previous month’s level of 29.11 million bpd in May.

Non-OPEC oil supply decreased to 59.67 million bpd in June, a fall of 0.47 million bpd from May’s level of 60.14 million bpd.

This brought down the world’s total oil supply to the lowest level in nine years, dropping by 2.39 million bpd from 89.25 million bpd in May to 86.86 million bpd in June.

“During June, global oil output tumbled to a nine-year low after Saudi Arabia cut an extra 1 million bpd below its OPEC+ target and output in both Iraq and the US fell by around 0.5 million bpd,” the IEA said in its report.

“Record OPEC+ cuts drove most of the decline in June. The group cut crude output by nearly 2 million bpd more than in May, lifting its overall cut above 10 million bpd and boosting compliance to 108% from 88% a month earlier,” it added.

Global demand to fall by 7.9 million bpd in 2020

On the demand side, global oil consumption is still weak due to the novel coronavirus (COVID), which is suppressing overall oil demand.

“Global oil demand fell by 16.4 million bpd year-on-year in the second quarter of 2020 as lockdowns were imposed to combat the Covid-19 pandemic,” the report said.

The IEA estimates that global oil demand will decline by 7.9 million bpd in 2020 but recover by 5.3 million bpd in 2021. However, it added, “the recent increase in Covid-19 cases and the introduction of partial lockdowns introduces more uncertainty to the forecast.”

In 2020, the Asia Pacific region is anticipated to lead demand with 33.7 million bpd, followed by the Americas with 28.9 million bpd and Europe with 13.5 million bpd.

Global oil demand is forecast to average 92.1 million bpd in 2020 and 97.4 million bpd in 2021, according to the IEA.

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